Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit. (b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss. (c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement. (d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 2 contracts
Samples: Merger Agreement (Zarlink Semiconductor Inc), Merger Agreement (Zarlink Semiconductor Inc)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties i. Indemnifying Stockholders shall not be entitled required to recover for make any Losses unless and indemnification payment pursuant to Section 7(a)(ii)(A) until such time as the Losses total amount of Damages that have been directly or indirectly suffered or incurred by any one or more of the Purchaser Indemnified Persons exceeds seventy-five thousand dollars ($75,000) (the “Deductible”) in the aggregate, in which case the Purchaser Indemnified Persons shall be entitled to recover the aggregate amount of all such Damages in excess of the Deductible; provided that the foregoing limitations will not apply (and will not limit the indemnification or other obligations of Indemnifying Stockholders) (i) in the event of intentional misrepresentation or fraud or (ii) to inaccuracies in or breaches of any of the Fundamental Representations or the Extended Representations.
ii. Purchaser shall not be required to make any indemnification payment pursuant to Section 7(b)(ii)(A) until such time as the total amount of Damages that have been directly or indirectly suffered or incurred by any one or more of the Seller Indemnified Persons exceeds seventy-five thousand dollars ($75,000) (the “Purchaser Deductible”) in the aggregate, in which case the Seller Indemnified Persons shall be entitled to recover the aggregate amount of all such Damages in excess of the Purchaser Deductible; provided that the foregoing limitations will not apply (and will not limit the indemnification or other obligations of Purchaser) (i) in the event of intentional misrepresentation or fraud or (ii) to inaccuracies in or breaches of any of the Purchaser Fundamental Representations.
iii. Other than in the event of intentional misrepresentation or fraud, the aggregate amount of Damages for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties Persons shall be entitled to recover all such Losses in excess indemnification pursuant to this Agreement shall be (i) limited to the value of the Consideration Common Stock (measured on the date of this Agreement) for breaches of the Fundamental Representations or the Extended Representations and other claims pursuant to this Agreement and (ii) limited to $1,000,000 for all other breaches under Section 7(a)(ii)(A) (the “Cap”).
iv. Other than in the event of intentional misrepresentation or fraud, the aggregate amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses Damages for which the Purchaser Seller Indemnified Parties are Persons shall be entitled to indemnification pursuant to this Agreement shall be indemnified hereunder exceed, with (i) limited to the value of the Consideration Common Stock (measured on the date of this Agreement) for breaches of the Fundamental Representations or the Extended Representations and other claims pursuant to this Agreement and (ii) limited to $1,000,000 for all other breaches under Section 7(b)(ii)(A) (the “Purchaser Cap”).
v. Payments by an Indemnifying Party pursuant to Section 7 in respect to any Company Stockholder, an amount equal to $6.0 million, and in Damages (taking into account any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalizationcap on such Damages hereunder) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) and any indemnity, contribution contribution, Tax benefits, payments from other responsible parties or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount Party in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount respect of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; claim, less any related reasonable costs and (ii) any indemnityexpenses, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and including the aggregate amount cost of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementpursuing any such related insurance claims.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 2 contracts
Samples: Merger Agreement (Agrify Corp), Merger Agreement (Agrify Corp)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess rights of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the Purchasers Indemnitees to indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect pursuant to the indemnification for Taxes under Article 7 or with respect provisions of Section 7.2(b) are subject to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by following limitations:
(i) the amount of any Loss subject to indemnification hereunder or of any Claim therefor shall be calculated net of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (iinet of direct collection expenses) any indemnity, contribution or other similar payment collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement), received by the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits Purchasers Indemnitees on account of the Purchaser Indemnified Parties attributable to such Loss. The liability Purchasers Indemnitees shall seek full recovery under all insurance policies covering any Loss or collateral sources to the same extent as they would if such Loss were not subject to indemnification hereunder and the Purchasers, the Company and the Subsidiaries shall not cancel any insurance policies in effect for periods prior to the Closing. In the event that an insurance recovery or indemnification payment is received by the Purchasers Indemnitees with respect to any Loss for which any such Person has been indemnified hereunder, then a refund equal to the aggregate amount of the recovery or payment (net of direct collection expenses and Taxes) shall be made promptly to the Sellers, which refund shall be distributed based on the proportion of the Loss borne by each such Seller, or, if a Loss has not yet been determined or paid by the Sellers, the Sellers’ indemnification obligations in respect of such Loss shall be reduced by the aggregate amount of the insurance recovery or indemnification payment (net of direct collection expenses);
(ii) no adjustment shall be made as a result of any Company Stockholder multiple, increase factor, or any other premium over the value paid by the Purchasers at Closing whether or not such multiple, increase factor or other premium had been used by Purchasers at the time of, or in connection with, calculating or preparing its bid, its proposed purchase price for damages the Purchased Units and the Shares or its final purchase price for the Purchased Units and the Shares;
(iii) except for Claims arising under Section 3.5 or in respect of Operating Wind Project Liabilities, the Purchasers Indemnitees will not be entitled to recover the first $200,000 in aggregate Losses (as limited by the applicable provisions of this Agreement Section 7.2(c) pursuant to Section 7.2(b), which amount shall serve as a one-time deductible against Losses; provided, however, that thereafter solely with respect to Losses that are individually less than $50,000 the Purchasers Indemnitees will not be several entitled to recover for such Losses pursuant to Section 7.2(b) until such Losses that are individually less than $50,000 are equal to or exceed $300,000 in the aggregate (and then only to the extent of such excess);
(iv) except for Claims arising under Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.7, 4.1, 4.5, 4.10, 4.15(d), 4.22, 4.27 and in respect of Operating Wind Project Liabilities (in which case the Sellers’ aggregate liability hereunder for all such Losses will not jointbe permitted to exceed the Purchase Price), the Purchasers Indemnitees will not be entitled to recover Losses pursuant to Section 7.2(b) to the extent the Sellers aggregate liability hereunder for all such Losses would otherwise exceed twenty percent (20%) of the Purchase Price (as adjusted pursuant to Section 2.6) if the Claim pertains to Section 4.11, 4.12, 4.15, 4.16, 4.17, 4.23, 4.25, or 4.26 and ten percent (10%) of the Purchase Price for all other items not listed in the immediately preceding clause or in the lead-in qualifier to this subsection (the “Liability Cap”) in the aggregate, and each Seller’s liability for Losses hereunder shall not exceed its Percentage Share of the Liability Cap;
(v) except for Claims arising under Section 3.5, the Purchasers Indemnitees shall not be entitled to recover Losses pursuant to Section 7.2(b) if (A) the Purchasers (or any assertion director or officer of Losses against Purchasers who is not a Seller or a director, officer or consultant of the Company prior to Closing) had actual knowledge at any Company Stockholder may time on or prior to the Closing Date of the facts, events or conditions constituting or resulting in such breach of representation, warranty or covenant or (B) the Purchasers could have mitigated or prevented such Loss using commercially reasonable efforts; and
(vi) except for Claims arising under Section 3.5, with respect to a particular Loss, each Seller shall only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited required to indemnify the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable Purchasers Indemnitees up to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss multiplied by such Seller’s Percentage Share. The Purchasers, for which themselves and for the Company Stockholder Indemnified Parties are entitled Purchasers Indemnitees, unconditionally waives any right it or they may have to be indemnified hereunder shall be reduced by (i) hold any Seller jointly liable for the amount obligations of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum Seller. The aggregate liability of any Company Stockholder Seller under this Section 7.2 shall not exceed such Seller’s Percentage Share of the Purchase Price (as adjusted pursuant to Section 2.6) for the Purchased Units and the Shares sold by such Seller to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderPurchasers hereunder.
Appears in 2 contracts
Samples: Unit Purchase Agreement, Unit Purchase Agreement (Hannon Armstrong Sustainable Infrastructure Capital, Inc.)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) 9.3.1 Notwithstanding anything to the contrary contained hereinin this Agreement, an Indemnitee which is seeking defense or indemnification for any Indemnification Loss shall be entitled to indemnification for the breach or inaccuracy of a representation or warranty only if the Indemnitee has given written notice to the Indemnitor prior to the expiration of the Survival Period.
9.3.2 Notwithstanding anything to the contrary in the Indemnification Escrow this Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability amount of any Company Stockholder Indemnification Loss for which indemnification is provided to an Indemnitee under this Article 9 shall be net of (a) any Tax benefits actually realized by the Indemnitee that are attributable to any deduction, loss, credit, refund or other reduction in Tax resulting from or arising out of a Loss in the year in which the Loss giving rise to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually claim for indemnification occurs; (b)insurance proceeds received by such Company StockholderIndemnitee in connection with the Indemnification Claim; or (c) any other third party reimbursement. The Indemnitee shall use commercially reasonable efforts to realize any Tax benefit, collect any insurance proceeds or obtain any third party reimbursement with respect to such Indemnification Claim, and if such Tax benefits, insurance proceeds or reimbursement are realized or obtained by the Indemnitee after the Indemnitor has paid any amount in respect of an Indemnification Loss to the Indemnitee, the Indemnitee shall reimburse the amount realized or collected by the Indemnitee up to the amount received from the Indemnitor for such Indemnification Loss, less the reasonable costs of collection, including reasonable attorneys’ fees.
Appears in 2 contracts
Samples: Purchase and Sale Agreement, Purchase and Sale Agreement (Sotherly Hotels Lp)
Limitations on Indemnification Obligations. (a) The rights of the Purchaser Indemnitees to indemnification pursuant to Section 7.02(a) are subject to the following limitations:
(i) The amount of any Loss subject to indemnification hereunder shall appropriately take into account Tax consequences and any insurance proceeds actually received by an Indemnified Parties Party (net of any retroactive premium adjustment resulting from such claim and any other increase in costs of insurance arising from the making of any claims under any such insurance policies, and the receipt and/or collection of any such insurance proceeds thereunder) as a result of any Loss upon which such indemnification claim is based. In the event that an Indemnified Party receives an indemnification payment from an Indemnified Party pursuant to this Article VII with respect to a particular Loss and subsequently receives an insurance recovery (net of all direct collection expenses) with respect to that same Loss, then the Indemnified Party shall promptly refund to that Responsible Party the appropriate amount of such indemnification payment such that the Indemnified Party does not retain, by means of such indemnification payment and such net insurance recovery, an amount exceeding the Indemnified Party’s actual Loss.
(ii) The Purchaser Indemnitees shall not be entitled to recover for any Losses pursuant to Section 7.02(a)(i) unless and until such time as the Losses in the aggregate of all such Losses for which the Purchaser Indemnified Parties are entitled Indemnitees would be liable, but for this clause (ii), exceeds on a cumulative basis an amount equal to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 [*****] (the "Purchaser Loss Threshold"“Deductible”), at in which time case, the Purchaser Indemnified Parties Indemnitees shall be entitled to recover all such losses only in excess of the Deductible; provided that the limitation set forth in this Section 7.04(a)(ii) shall not apply in the case of Losses resulting from a breach of the Specified Representations.
(iii) The Purchaser Indemnitees shall not be entitled to recover aggregate Losses pursuant to Section 7.02(a)(i) in excess of [*****]; provided that:
(A) In the case of Losses arising from or relating to a breach of representations or warranties made in [*****], the Purchaser Indemnitees shall not be entitled to recover aggregate Losses in excess of [*****]; and
(B) In the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion case of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive resulting from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or therebyother Specified Representations, the maximum aggregate liability of limitation set forth in this Section 7.04(a)(iii) shall not apply;
(iv) [*****]; and
(v) No Purchaser Indemnitee shall be entitled to indemnification for any Company Stockholder Loss if and to the Purchaser extent such Loss was reflected in the calculation of the adjustment to the Purchase Price, if any, pursuant to Section 2.06 (Working Capital, Indebtedness and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderTransaction Expenses Adjustment).
Appears in 2 contracts
Samples: Stock and LLC Purchase Agreement, Stock and LLC Interest Purchase Agreement (Innophos Holdings, Inc.)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess rights of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the Buyer Indemnitees to indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect pursuant to the indemnification for Taxes under Article 7 or with respect provisions of Section 9.2(b) are subject to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by following limitations:
(i) the amount of any insurance proceeds which Loss subject to indemnification by the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution Seller hereunder or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder Claim therefor shall be reduced by any and all amounts actually recovered by the Buyer Indemnitee from the following collateral sources (collectively, the “Collateral Sources”): (i) the amount of any insurance proceeds which actually received by the Company Stockholder Indemnified Parties recover with respect to Buyer Indemnitees on account of such Loss; , net of expenses paid to third parties in procuring any such recovery, and (ii) any indemnity, contribution Tax benefit actually realized by the Buyer Indemnitees as a result of the event or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect circumstances giving rise to such Loss.
. In the event that the Buyer Indemnitees obtain any recovery from one or more Collateral Sources or any other Person alleged to be responsible for any Losses, subsequent to an indemnification payment made hereunder, then such Buyer Indemnitee shall promptly reimburse the Seller for any payment made or expense incurred by Seller in connection with providing such indemnification up to the amount received by the Buyer Indemnitee, (c) This Section 6.8 is net of direct collection expenses and Taxes), or, if a Loss has not yet been determined or paid by the Seller, the Seller’s indemnification obligations in no way intended to affect the obligation respect of Purchaser to deliver the Merger Consideration and such Loss shall be reduced by the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms recovery from any Collateral Sources or any other Person alleged to be responsible for any Losses (net of this Agreement.direct collection expenses and Taxes);
(dii) Notwithstanding anything the Buyer Indemnitees will not be entitled to recover Losses pursuant to Section 9.2(b)(i) unless and until the aggregate Losses incurred by the Buyer Indemnitees pursuant to Section 9.2(b)(i) exceed one and one-half percent (1.5%) of the Purchase Price in the aggregate (the “Deductible”) (after which the R&W Insurance Policy, or the Seller, as applicable, will be obligated to indemnify the Buyer Indemnitees, subject to the contrary contained limitations set forth herein, from and against all Losses in excess of the Deductible);
(iii) the Buyer Indemnitees shall be responsible for any and all Losses up to the amount of the Retention (as such term is defined in the R&W Insurance Policy) under the R&W Insurance Policy. The sole source of funds to recover for any Losses arising from a breach of the Seller’s representations in Section 4.14(d) shall be the R&W Insurance Policy. Recourse for Losses that were specifically excluded from coverage under the R&W Insurance Policy as set forth in Section 4 of the R&W Insurance Policy on the day coverage under the R&W Insurance Policy became effective (the “Excluded Matters”) shall be to the Seller Parent Guaranty. With respect to Other R&W Insured Losses (as defined below), Buyer shall notify Seller if it intends to seek recourse under the Seller Parent Guaranty before initiating a claim under the R&W Insurance Policy. If the Buyer elects not to seek recourse to the Seller Parent Guaranty then the Buyer’s sole recourse for Other R&W Insured Losses shall be the R&W Insurance Policy. If, and only if, Buyer notifies Seller that it intends to seek recourse to the Seller Parent Guaranty, shall the procedures provided by Sections 9.2(c)(iv) and (v) apply;
(iv) Upon the Insurer (as such term is defined in the R&W Insurance Policy) acknowledging that the Retention has been fully satisfied, the R&W Insurance Policy shall be the initial source of funds to recover for any other Losses for which the Buyer Indemnitees are entitled to indemnification in respect of Section 9.2(b) (the “Other R&W Insured Losses”). With respect to the Other R&W Insured Losses, in the Indemnification Escrow Agreement, event that (A) the Working Capital Escrow Agreement, remaining available Limit of Liability (as such term is defined in the R&W Insurance Policy) under the R&W Insurance Policy is insufficient to fully indemnify the Buyer Indemnitees for such Other R&W Insured Losses as a consequence of such Limit of Liability being wholly or partially exhausted (the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.“
Appears in 2 contracts
Samples: Membership Interest Purchase Agreement (TerraForm Power, Inc.), Membership Interest Purchase Agreement (Atlantic Power Corp)
Limitations on Indemnification Obligations. The rights of (x) the Parent Indemnitees to indemnification pursuant to the provisions of Section 9.2(a) and Section 9.2(c) are subject to the following limitations and methods of calculations and determination and (y) the Holder Indemnitees to indemnification pursuant to the provisions of Section 9.2(b) are subject to the limitations and methods of calculations and determination set forth in clauses (a), (d), (e), (f), (g) and (h) below:
(a) The Purchaser Indemnified Parties the amount of any and all Damages will be determined net of (i) any amounts actually recovered by the Parent Indemnitees under insurance policies or indemnity, contribution or similar agreements with respect to such Damages (provided, that the amount deemed to be so recovered under insurance policies shall be net of (A) the deductible for such policies and (B) any increase in the premium for such policies arising out of or in connection with such Damages), and (ii) the amount of any net Tax benefit actually realized by the Parent Indemnitees with respect to such Damages (taking into account the receipt of the related indemnity payment) in the taxable year that such Damages arise;
(b) the Parent Indemnitees shall not be entitled to recover for any Warranty Loss (other than (x) a Warranty Loss related to a Company Fundamental Rep or (y) a loss as a result of an ICG Fundamental Rep) unless the cumulative total of the Damages suffered by the Parent Indemnitees related to Warranty Losses unless and until such time as exceeds $4,000,000 (the Losses in “Basket”), whereupon the aggregate for which the Purchaser Indemnified Parties are Parent Indemnitees shall be entitled to be indemnified hereundermake a claim and indemnity hereunder only for the Damages in excess of the Basket, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties and no Parent Indemnitee shall be entitled to recover all such Losses in excess of for any Warranty Loss unless the amount of the Purchaser Loss Threshold. Except Damages suffered or paid by any Parent Indemnitee for those Losses which arise out of the indemnification for Taxes under Article 7 individual claims or a breach series of related claims exceeds $150,000 (the representations and warranties contained in Section 2.1 (Organization“Minimum Claim Basket”), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by ; provided that (i) neither the Basket nor the Minimum Claim Basket shall apply to indemnity for Direct Recourse Damages and (ii) the liability for Damages shall be limited as provided in Section 9.6;
(c) if an Indemnified Party has been indemnified for Damages hereunder, and at any time thereafter an Indemnified Party recovers all or a portion of such Damages from a third Person (including pursuant to any insurance policy or indemnity, contribution or similar agreement), the Indemnified Party which made such recovery shall promptly refund the amount of any insurance proceeds which the Purchaser Indemnified Parties recover paid with respect to such Loss; Damages (iiup to the amount recovered from the third Person);
(d) an Indemnified Party shall not be entitled under this Agreement to multiple recovery for the same Damages;
(e) except for any indemnitysuch damages that shall be payable as a result of a Third Party Claim, contribution an Indemnified Party shall not be entitled under this Agreement to indemnification for punitive, special, consequential or other similar payment which exemplary damages, or any damages associated with any diminution of value, loss of business reputation or lost profits, opportunities, multiple of earnings, future revenue, income, profits or EBITDA;
(f) if a Parent Indemnitee recovers Damages pursuant Section 9.2(a), the Purchaser Indemnified Parties receive from Holders shall be subrogated, to the extent of such recovery, to such Parent Indemnitee’s rights against any third party with respect to such Loss; and recovered Damages;
(iiig) an amount equal to except as specified in Section 9.6 or the final paragraph of Section 9.2(a), in no event shall any net Tax Benefits Responsible Party be liable for damages in excess of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement Escrow Amount, absent fraud or Willful Misconduct;
(h) no Damages shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited recoverable by a Person to the Common Merger Consideration actually received by extent such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by Damages include or reflect amounts taken into consideration in the Purchaser Indemnified Parties after the taxable year of payment computation of the LossClosing Date Merger Consideration, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion as adjusted by any adjustment of the amount of such Tax Benefit.pre-Closing estimates pursuant to Section 2.6(d); and
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) for purposes of determining whether there has been a breach for indemnification purposes and the amount of any insurance proceeds which Damages that may be the Company Stockholder Indemnified Parties recover with respect to such Loss; subject matter of a claim for indemnification hereunder, each representation and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is warranty in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration this Agreement and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything each certificate delivered pursuant hereto shall be read without regard and without giving effect to the contrary term(s) “material” or “Material Adverse Effect” contained hereintherein, except in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any case of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderQualified Representations.
Appears in 2 contracts
Samples: Merger Agreement, Merger Agreement (Icg Group, Inc.)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Notwithstanding anything herein to the contrary, Stockholders shall not only be entitled required to recover for any indemnify the Parent and Parent Indemnitees once Stockholders’ aggregated indemnifiable Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Twenty Five Thousand Dollars ($250,000 25,000) (the "Purchaser Loss Threshold"“Deductible”), at which time the Purchaser Indemnified Parties point Stockholders shall be entitled required to recover all such provide indemnification for indemnifiable Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitDeductible.
(b) Each Loss The aggregate amount of indemnifiable Losses for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder Stockholders shall be reduced by liable shall not exceed One Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the “Cap”), provided, however, notwithstanding anything to the contrary in this Agreement, (1) neither the Deductible nor the Cap shall apply in respect of (i) breaches of the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover Fundamental Representations, or (ii) claims with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Lossfraud.
(c) This Section 6.8 is Notwithstanding the provisions of Sections 8.8 (a) and (b), the Deductible and Cap shall not apply to a claim for indemnification in no way intended connection the Nexus Litigation. The parties agree that the Parent shall hold back 80,000 shares of the Stock Consideration (“Indemnity Shares”) to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid satisfy any claims for indemnification by Purchaser at Closing Parent for Losses in accordance connection with the terms of this Agreement.
(d) Notwithstanding anything to Nexus Litigation. The shares shall be valued at $2.50 per share. The Parent shall release the contrary contained hereinIndemnity Shares, in whole or in part, to Parent or Shareholders, as the Indemnification Escrow Agreementcase may be, within 10 days following (i) the Working Capital Escrow Agreement, incurrence by Parent of Losses associated with the Nexus Litigation and (ii) settlement or the Stockholder Representative Agreement, and in any other resolution of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderNexus Litigation.
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Limitations on Indemnification Obligations. Notwithstanding any provision to the contrary contained in this Agreement, the rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 7.2(a) are subject to the following limitations:
(a) The Purchaser Indemnified Parties the amount of any and all Losses will be determined net of (i) any amounts recovered or reasonably expected to be recovered by the Buyer Indemnitees pursuant to any indemnification by, or indemnification agreement with, any third party, (ii) any amounts recovered or reasonably expected to be recovered by the Buyer Indemnitees pursuant to any insurance policy, (iii) any other cash receipts or sources of reimbursement received by the Buyer Indemnitees in respect of or as an offset against such Losses, (each source of recovery referred to in clauses (i), (ii) and (iii), a “Collateral Source”);
(b) excluding (i) claims arising from or based on Fraud, of any Transaction Document, and (ii) claims for breach of Fundamental Representations or Specified Representations, the Buyer Indemnitees shall not be entitled to recover for any Losses unless and pursuant to this Agreement until such time as the Losses in the aggregate for total amount which the Purchaser Indemnified Parties are entitled to be indemnified hereunderBuyer Indemnitees would recover under this Agreement (as limited by the provisions of this Section 7.4), including the indemnification but for Taxes set forth in Article 7this Section 7.4(b), exceed exceeds $250,000 90,000 (the "Purchaser Loss “Threshold"”), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 ;
(Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersc) or actual fraud, in no event shall the Losses for which obligations of the Purchaser Indemnified Parties are Sellers to provide indemnification pursuant to Section 7.2(a)(i) Agreement exceed an aggregate amount equal to the Indemnity Escrow Amount, other than based on a breach of a Fundamental Representation, Specified Representation or arising from or based on Fraud, criminal misconduct or intentional or willful misrepresentation or intentional or willful breach of any Transaction Document;
(d) the Buyer Indemnitees shall not be entitled to recover Losses hereunder resulting from breach of representations and warranties (other than based on a Fraud, breach of a Fundamental Representation or Specified Representation) from any source other than the Indemnity Escrow Amount in the Escrow Account;
(e) if any Buyer Indemnitee has been indemnified for a Loss hereunder and at any time thereafter such Buyer Indemnitee or any other Buyer Indemnitee recovers all or a portion of such Loss from a Collateral Source, the Buyer Indemnitees shall promptly refund to the Escrow Account (if the during the term of the Escrow Fund) or the Shareholder Representative (if the term of the Escrow Fund has expired and the Escrow Fund has been liquidated) the amount previously received by the Buyer Indemnitees (whether received from the Escrow Account or from or on behalf of the Sellers) with respect to such Loss (up to the amount recovered from the Collateral Source);
(f) to the extent an item has been reflected as a liability or a deduction from an asset in the calculation of the Closing Net Working Capital, or has been treated as Closing Date Funded Indebtedness or a Selling Expense included in the determination of the Closing Cash Consideration, the Buyer Indemnitees shall not be indemnified hereunder exceedentitled to indemnification pursuant to this Agreement on account of said item; and
(g) The Sellers shall have no obligation to indemnify the Buyer Indemnitees for any Losses attributable to any Taxes (i) to the extent such Taxes have been adequately reflected as a liability in the Closing Net Working Capital, (ii) resulting from an action taken by Buyer, SMP or any of their Affiliates after the Closing Date outside the ordinary course of business that is not contemplated by this Agreement (iii) attributable to the Buyer’s breach of any covenant set forth in Section 4.4, or (iv) of Buyer, SMP or any of their Affiliates (A) attributable to any Post-Closing Tax Period or (B) with respect to any Company StockholderStraddle Period, an amount equal to $6.0 million, and in any event Losses with respect attributable to the portion of such Taxable period deemed to begin after the Closing Date determined pursuant to Section 4.4(f). The Buyer Indemnitees shall use commercially reasonable efforts to make a claim for recovery of any amounts recoverable by them from any Collateral Source. Notwithstanding anything to the contrary set forth herein, the limitations set forth in Section 7.4(b), Section 7.4(c), Section 7.4(d) and Section 7.4(e) shall not limit the rights of the Buyer Indemnitees to indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization)covenants or Fraud; provided, 2.2 (Subsidiaries)however, 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) that the liability of this Agreement and actual fraud the Sellers for such matters shall not exceed with respect be subject to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled cap equal to be indemnified hereunder shall be reduced by (i) the amount of any insurance net, after-Tax proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitSellers.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
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Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 7.2(a) are subject to the following limitations:
(a) The Purchaser Indemnified Parties the amount of any and all Losses shall be determined net of (i) any amounts recovered by the Buyer Indemnitees under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses and (ii) any Tax benefits actually realized with respect to such Losses in the Tax year in which such Losses are paid or incurred, with any deduction or credit to Taxes in respect of such Losses deemed made after all other deductions are claimed or credits applied for such Tax year;
(b) the Buyer Indemnitees will not be entitled to recover for any Losses unless and pursuant to clause (i) of Section 7.2(a) until such time as the Losses in the aggregate for total amount which the Purchaser Indemnified Parties are entitled to be indemnified hereunderBuyer Indemnitees would recover under clause (i) of Section 7.2(a) (as limited by the provisions of Section 7.4(a)), including the indemnification but for Taxes set forth in Article 7this Section 7.4(b), exceed exceeds $250,000 425,000 (the "Purchaser Loss Threshold")) and then only for the excess over the Threshold;
(c) any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, "Company Material Adverse Effect" or other similar qualification contained in or otherwise applicable to such representation or warranty;
(d) at which any time the Purchaser Indemnified Parties shall Buyer Indemnitees (i) will be entitled to recover all such Losses in excess of no more than the amount of cash then in the Purchaser Escrow Account and (ii) pursuant to this Agreement, will not be entitled to recover Losses from any source other than the Escrow Account;
(e) until such time that the Escrow Funds have been fully disbursed in accordance with this Agreement and the Escrow Agreement, if a Buyer Indemnitee has been indemnified for a Loss Threshold. Except for those Losses hereunder, and at any time thereafter a Buyer Indemnitee recovers all or a portion of such Loss from a third Person (including pursuant to any insurance policy), the Buyer Indemnitee which arise out made such recovery shall promptly return to the Escrow Account (or to Seller Representative, on behalf of the Members) the amount paid from the Escrow Account with respect to such Loss (up to the amount recovered from the third Person);
(f) Losses for which any Buyer Indemnitee may be entitled to indemnification for Taxes under Article 7 or a breach hereunder shall not include any of the representations and warranties current liabilities of the Target Companies as of the Closing to the extent such current liabilities are included in the calculation of the Net Working Capital Adjustment included in the Final Statement of Purchase Price; and
(g) notwithstanding anything contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraudherein to the contrary, in no event shall will the Losses for which the Purchaser Indemnified Parties are Buyer Indemnitees be entitled to be indemnified indemnification hereunder exceedfor any Losses that are incurred by any Buyer Indemnitee as a result of any action taken by Buyer or any of its Affiliates after the Closing (including, with respect to without limitation, as a result of any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect changes to the indemnification for Taxes under Article 7 or with respect to breaches directors and/or officers of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby Target Companies/or thereby, the maximum aggregate liability officers of any Company Stockholder to of the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderTarget Companies).
Appears in 1 contract
Limitations on Indemnification Obligations. The rights of an Indemnified Party to indemnification pursuant to the provisions of Section 8.1 are subject to the following limitations:
(a) The Purchaser Indemnified Seller Indemnifying Parties shall not be entitled to recover have no liability under Section 8.1(a)(A), (J), and (K) for Damages resulting from (i) any Losses individual claim unless the Damages from such individual claim exceed [****] dollars ($[****]) (the “Threshold”), and until such time as (ii) unless the Losses in the aggregate cumulative amount of Damages for which the Purchaser Seller Indemnifying Parties would, but for this provision, be liable to the Buyer Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed exceeds [****] Dollars ($250,000 [****]) (the "Purchaser Loss Threshold"“Basket”), at in which time the Purchaser case, such Buyer Indemnified Parties shall be entitled to recover all such Losses indemnification only for Damages in excess of the Basket. For the avoidance of doubt, the Seller Indemnifying Parties shall not have any liability under Section 8.1(a)(A), (J), and (K) unless and until the amount of an individual claim for Damages equals or exceeds the Purchaser Loss Threshold. Except Once a claim exceeds the Threshold, then, to the extent that cumulative Damages exceed the Basket, the Buyer Indemnified Parties would be entitled to recover the full amount of Damages in excess of the Basket.
(b) The Seller Indemnifying Parties and Sellers shall not in the aggregate be liable for those Losses any Damages in excess of [****] Dollars ($[****]) (the “Cap”); provided, however, with respect to Damages arising out of the Statute of Limitations Claims (except for Specified Indemnity Obligations and claims for indemnification under Section 3.1, Section 3.2, Section 3.11, and Section 3.13 of the Real Estate Purchase Agreement) or Fraud, the Seller Indemnifying Parties shall not in the aggregate be liable for any Damages in excess of the actual Purchase Price paid to Sellers under this Agreement; provided, further that with respect to Damages arising out of Specified Indemnity Obligations the Seller Indemnifying Parties and Sellers shall not in the aggregate be liable for any Damages in excess of [****] Dollars ($[****]) and with respect to Damages arising out of claims for indemnification under Section 3.1, Section 3.2, Section 3.11, and Section 3.13 of the Real Estate Purchase Agreement the Seller Indemnifying Parties and Sellers shall not in the aggregate be liable for any Damages in excess of [****] Dollars ($[****]).
(c) In any event in which indemnification is sought for Damages pursuant to Section 8.1(a) or Section 8.1(b), indemnification for such Damages shall firstly be sought from the Holdback and, if such Damages are not limited by the Cap pursuant to Section 8.3(b) and the Holdback has been fully exhausted, shall be sought directly from the Indemnifying Parties, subject to the limitations and other provisions set forth in this ARTICLE VIII.
(d) The Seller Indemnifying Parties and Sellers shall not be liable for any Damages to the extent that such Damages (i) arise out of changes after the indemnification for Taxes Closing Date in any Laws or GAAP that retroactively applies to the Company or any of its Subsidiaries, (ii) are duplicative of any amounts that have previously been recovered under Article 7 this Agreement or the other Transaction Documents, (iii) have been taken into account in calculating the Closing Working Capital amount or (iv) have been actually recovered by the Buyer Indemnified Party from another Person including, without limitation, as a breach result of the representations Buyer Indemnified Party receiving compensation for such Damages pursuant to any policy of insurance maintained by the Buyer Indemnified Party. Notwithstanding anything to the contrary in the Transaction Documents and warranties contained subject to such other limitations set forth in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraudthe Transaction Documents, in no event shall the Losses Seller Indemnifying Parties and Sellers be liable, in the aggregate, for which any Damages arising out of any indemnity obligations under the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and Transaction Documents in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion excess of the Common Merger Consideration actual Purchase Price paid to Sellers under this Agreement. The amount of any Damages of an Indemnified Person shall be calculated net of (A) any insurance proceeds actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by Party on account of such Damages (i) the amount of less any increase in any insurance proceeds which the Purchaser Indemnified Parties recover with respect policy premium that is incurred as a result of making a claim for such insurance proceeds) and/or (B) any non-recoverable indemnification or contribution amounts actually paid to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from Party by any third party with respect to on account of such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such LossDamages. The liability of any Company Stockholder Buyer Indemnified Party shall use commercially reasonable efforts to pursue insurance coverage for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitDamages.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Subject to Section 7.3(j), there shall not be entitled to recover no Liability of any Company Securityholders for any Losses indemnification under Section 7.1(a) unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed amount of Adverse Consequences thereunder exceeds $250,000 350,000 (the "Purchaser Loss Threshold"“Basket”), at which time the Purchaser Indemnified Parties shall be entitled indemnified with respect to recover the aggregate amount of all such Losses in excess Adverse Consequences, including the Basket; provided, however, that the Basket shall not apply to fraud or the breach or inaccuracy of any of the Company Fundamental Representations.
(b) The aggregate amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses Adverse Consequences for which the Purchaser Indemnified Parties are entitled to may be indemnified hereunder exceed, with respect to any under Section 7.1(a) for breaches and inaccuracies of representations and warranties other than the Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect Fundamental Representations shall be limited to the indemnification for Taxes under Article 7 or with respect to breaches Escrow Amount.
(c) The aggregate amount of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss Adverse Consequences for which the Purchaser Indemnified Parties are entitled to may be indemnified hereunder under Section 7.1 shall be reduced by limited to fifty percent (i50%) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common aggregate Merger Consideration actually received by such paid to Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this AgreementSecurityholders.
(d) Notwithstanding anything If any Purchaser Indemnified Party is entitled to receive any amount under Section 7.1, Purchaser shall, on behalf of such Purchaser Indemnified Party, (i) first, seek recovery from the Escrow Amount for as much of such amount as is available, (ii) second, with respect to any such amount that cannot be satisfied through recovery from the Escrow Amount (and subject to the contrary contained hereinother limitations set forth in this Section 7.3), in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed offset such remaining amount against the amount of Common any Earn Out Payment that is due and payable (but that has not yet been paid) at the time that such Purchaser Indemnified Party first becomes entitled to receive such amount or at any time thereafter and (iii) third, solely with respect to any such amount that cannot be satisfied through recovery from the Escrow Amount or from an offset against the Next Earnout Payment (and subject to the other limitations set forth in this Section 7.3), seek recovery from each Company Securityholder of such Company Securityholder’s pro rata portion of such unsatisfied amount (where such pro rata portion is based on the percentage that the Accrued Merger Consideration actually received by a Company Securityholder bears to the aggregate amount of Accrued Merger Consideration received by all Company Securityholders). “Next Earnout Payment” means, with respect to any amount that a Purchaser Indemnified Party is entitled to receive under Section 7.1, (A) the Earn Out Payment that is due and payable (but that has not yet been paid) at the time that such Company Stockholder.Purchaser Indemnified Party first becomes entitled to receive such amount, or (B) if no such Earn Out Payment is then due and payable, the Earn Out Payment, if any, that is reasonably expected to become due and payable within 120 days, or (C) if no such Earn Out Payment is reasonably expected to become due and payable within 120 days and if the Representative provides a written election to Purchaser within such 120-day period, the Earn Out Payment, if any, that becomes due and payable with respect to the Annual Earnout Period in which such Purchaser Indemnified Party first becomes entitled to
Appears in 1 contract
Samples: Merger Agreement (Arthrocare Corp)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any rights of the agreements contemplated hereby or thereby, the maximum aggregate liability of Indemnitees to any Company Stockholder payment with respect to any indemnification pursuant to Section 9.2 are subject to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed following limitations:
(a) the amount of any and all Losses pursuant to Section 9.2(a) or Section 9.2(b) shall be determined net of (i) any amounts actually recovered by the Indemnitees under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses, in each case calculated net of reasonable out-of-pocket costs and expenses and premium increases incurred in connection with such recoveries and (ii) any reduction in cash Taxes paid by the Indemnitees for the taxable period in which such Loss occurs or the immediately succeeding two (2) taxable years as a result of any deduction attributable to such Loss;
(b) except in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), or Fraud, the Purchaser Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(a)(i) until the total amount which such Purchaser Indemnitee would recover under Section 9.2(a)(i) (as limited by the provisions of Sections 9.4(a) and 10.18), but for this Section 9.4(b), exceeds $175,000 (the “Deductible Amount”) in which case such Purchaser Indemnitee shall only be entitled to recover Losses in excess of such amount, subject to the other limitations herein;
(c) except in connection with breaches of Purchaser Fundamental Representations or Fraud, the Seller Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(b)(i) until the total amount which such Seller Indemnitee would recover under Section 9.2(b)(i) (as limited by the provisions of Sections 9.4(a) and 10.18), but for this Section 9.4(c), exceeds the Deductible Amount, in which case such Seller Indemnitee shall only be entitled to recover Losses in excess of such amount, subject to the other limitations herein;
(d) except in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), or Fraud, cancellation of Purchaser Common Merger Consideration actually received Shares with a value of $175,000 pursuant to Section 9.6(a)(i) shall be the sole source of recovery for any claims made by Purchaser Indemnitees for Losses pursuant to Section 9.2(a)(i) and in no event, except in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), or Fraud, shall the Purchaser Indemnitees be entitled to recover more than $175,000 in the aggregate through cancellation of Purchaser Common Shares pursuant to Section 9.2(a)(i) and Section 9.6(a)(i);
(e) in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), (i) the Purchase Indemnitees shall not be entitled to recover Losses until the total amount which such Company Stockholder.Purchaser Indemnitee would recover with respect thereto (as limited by the provisions of Sections 9.4(a) and 10.18), but for this Section 9.4(e), exceeds $5,000,000, in which case such Purchaser Indemnitee shall only be entitled to recover Losses in excess of such amount, subject to the other limitations herein; provided that the Purchaser Indemnitees may recover Losses up to an amount equal to $175,000 once the Deductible Amount is exceeded; and (ii) the Purchaser Indemnitees shall not be entitled to recover Losses in excess of an amount that is equal to the Purchase Price;
(f) in connection with Fraud and breaches of covenants, the Purchaser Indemnitees shall not be entitled to recover Losses in excess of an amount that is equal to the Purchase Price;
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Seller shall not be entitled to recover liable for any indemnification under Section ------- 13.01 (other than indemnification arising from Seller's breach of its ----- representations in Section 5.10) until the total amount of Losses unless and until such time as incurred by ------------ the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Buyer exceeds One Hundred Thousand Dollars ($250,000 100,000 US) (the "Purchaser Loss ThresholdThreshold Amount"), at which time provided that if the Purchaser Indemnified Parties shall be entitled Threshold Amount is exceeded with respect to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which Seller has an indemnification obligation under this Article ------- XIII, then Seller's obligation shall be the Purchaser Indemnified Parties are entitled difference between the full amount ---- of such Losses and the Threshold Amount. (Seller's obligation to repurchase the Universal Equipment under Section 7.09 shall not be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect subject to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (CapitalizationThreshold ------------ Amount.) and 2.16 (Tax Matters) For purposes of this Agreement Section 13.03, Seller and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder Buyer shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect referred ------------- to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) separately as an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit"Indemnifying Party."
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder Neither Indemnifying Party shall be reduced liable for indemnification payments to the extent such aggregate indemnification payments by (i) such Indemnifying Party exceed the amount sum of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect Escrowed Closing Payment plus the Performance Amount actually received by the Seller, except to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect extent due to such Lossfraud.
(c) This No Claim for indemnification by an Indemnifying Party under this Article XIII shall be valid unless a Claims Notice (as defined in Section 6.8 13.04) ------------ ------------- has been delivered to such Indemnifying Party with respect to such Claim. Indemnification obligations shall only apply where such Claims Notice is in no way intended received, on or prior to affect thirteen (13) months following the Closing Date, except that indemnification obligations for Claims (i) against Buyer by any taxing jurisdiction for taxes owed by Seller for any period prior to the Closing Date shall apply when such Claims Notice is received on or prior to the expiration of the applicable statute of limitations; (ii) of Seller against Buyer due to Buyer's obligations under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 shall apply when such Claims Notice is received on or prior to the expiration of the applicable statute of limitations, and (iii) due to Seller's breach of Section 1.06 (Seller Not to Employ Continuing Employees), Section 3.01 ------------ ------------ (Non-Competition), Section 4.01 (Seller's Obligation to Purchase Equipment from ------------ Buyer), Section 7.10 (Certain Consigned Inventory), Section 8.01 ------------ ------------ (Confidentiality), and Section 8.07 (Agreement to Comply with Xxxxxx Non- ------------ Compete) shall apply when such Claims Notice is received on or prior to thirty (30) days after the end of the applicable obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementdate.
(d) Notwithstanding anything Nothwithstanding the foregoing, Sections 13.03(b) and (c) shall not apply to Buyer's obligations to pay the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, Assumed Liabilities or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.comply with Section 2.05. ------------ -65-
Appears in 1 contract
Samples: Sale and Purchase Agreement (Stevens International Inc)
Limitations on Indemnification Obligations. (a) The Purchaser Subject to the other limitations contained in this Section 7.05, neither Buyer nor Buyer Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties Persons shall be entitled to recover all such indemnification pursuant to Section 7.02 unless the aggregate amount of Losses incurred by Buyer and Buyer Indemnified Persons under this Agreement exceeds 1% of the Purchase Price in the aggregate (the “Threshold Amount”), in which case Seller or City shall then be liable for Losses in excess of the Threshold Amount; provided, however, that the foregoing limitations contained in this Section 7.05(a) shall not apply to any claims for indemnification based on fraud, intentional misrepresentation or willful misconduct.
(b) Subject to the other limitations contained in this Section 7.05 neither Seller, City nor Seller Indemnified Persons shall be entitled to indemnification pursuant to Section 7.03(a) unless the aggregate amount of Losses incurred by Seller, City and Seller Indemnified Persons under this Agreement exceeds the Purchaser Loss Threshold. Except Threshold Amount, in which case Buyer shall then be liable for those Losses which arise out in excess of the Threshold Amount; provided, however, that the foregoing limitations contained in this Section 7.05(a) shall not apply to any claims for indemnification based on fraud, intentional misrepresentation or willful misconduct.
(c) Except in the case of fraud, intentional misrepresentation or willful misconduct (for Taxes which all applicable legal and equitable remedies will be available to Buyer), Buyer Indemnified Parties shall only be entitled to assert claims under Article 7 or a breach Section 7.02 up to the aggregate amount of 5% of the representations and warranties contained in Section 2.1 Purchase Price (Organizationthe “Liability Cap”), Section 2.2 (Subsidiaries), Section 2.4 (Execution which shall represent the sole and Delivery), Section 2.6 (Capitalization), exclusive remedy of Buyer and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser other Buyer Indemnified Parties are entitled for any such claims under Section 7.02.
(d) Payments by an Indemnifying Party pursuant to be indemnified hereunder exceed, with Section 7.02 or Section 7.03 in respect to of any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) limited to the amount of any liability or damage that remains after deducting therefrom any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) actually received from a third party insurer and any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive received from any a third party with insurer by the Indemnified Party in respect to of any such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Lossclaim. The liability of any Company Stockholder for damages Indemnified Party shall use its commercially reasonable efforts to recover under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any policies or indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from agreements for any third party with respect Losses prior to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of seeking indemnification under this Agreement.
(de) Notwithstanding anything Payments by an Indemnifying Party pursuant to Section 7.02 or Section 7.03 in respect of any Loss shall be reduced by an amount equal to any Tax benefit realized or reasonably expected to be realized as a result of such Loss by the Indemnified Party.
(f) Each Indemnified Party shall take, and cause its Affiliates to take, all reasonable steps to mitigate any Loss in accordance with applicable law.
(g) Subject to the contrary contained hereinprovisions of Sections 3.01 and 14.11 and any other provisions for specific performance, in the Indemnification Escrow Parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, unless such claims are based on fraud, intentional misrepresentation or willful misconduct, shall be pursuant to the Working Capital Escrow indemnification provisions set forth in this Article VII. In furtherance of the foregoing, each Party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, it may have against the other Party hereto and their Affiliates and each of their respective Representatives arising under or the Stockholder Representative Agreementbased upon any Law, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder except pursuant to the Purchaser indemnification provisions set forth in this Article VII or unless such claims or causes of action allege fraud, intentional misrepresentation or willful misconduct. Nothing in this Section 7.05(g) shall limit any Person’s right to seek and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, obtain specific performance to which such Person shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderbe entitled pursuant to this Agreement.
Appears in 1 contract
Samples: Asset Purchase Agreement
Limitations on Indemnification Obligations. (a) The Purchaser period during which claims for indemnification by Buyer or by any Seller Indemnified Parties Person may be initiated shall not be entitled commence at the Closing Date and terminate at the date that is 24 months after the Closing Date (the “Claim Period”). The indemnification obligations under this Article 11 shall terminate on the date that is 24 months after the Closing Date, except for matters as to recover which Buyer or a Seller Indemnified Person has made a claim for any Losses unless and indemnity on or before such date, which claim shall survive the expiration of such period until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss claim is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing finally resolved in accordance with the terms of this AgreementArticle 11 and the Escrow Agreement and any obligations with respect thereto are fully satisfied.
(b) Buyer may not recover from the Escrow Amount in respect of any claim for indemnification unless and until indemnifiable Losses of Buyer have been incurred, paid or properly accrued in an aggregate amount greater than $375,000 (the “Indemnification Deductible”). Once the Indemnification Deductible has been exceeded, Buyer shall be entitled to recover from the Escrow Amount only indemnifiable Losses in excess of the Indemnification Deductible.
(c) The Seller Indemnified Persons may not recover from Buyer in respect of any claim for indemnification, other than claims for Taxes attributable to (i) the operation of the Company Group’s business after the Closing Date or (ii) actions or transactions occurring on the Closing Date (after the consummation of the Closing) other than in the ordinary course of business, unless and until indemnifiable Losses have been incurred, paid or properly accrued in an aggregate amount greater than the Indemnification Deductible. Once the Indemnification Deductible has been exceeded, the Seller Indemnified Persons shall be entitled to recover from Buyer only indemnifiable Losses in excess of the Indemnification Deductible.
(d) Solely for purposes of this Article 11 and the determination of the indemnification obligations under paragraph 11.3, any qualifications by the terms “material” or “Material Adverse Effect” set forth in the text of Seller’s representations and warranties in Article 4 shall be ignored (i.e., the representations and warranties in Article 4 shall be read as though the terms “material” or “Material Adverse Effect” have been deleted).
(e) Neither Buyer nor any Seller Indemnified Person shall have any indemnification rights under this Article 11 in respect of any claim:
(i) for any single Loss that is less than $25,000, such claims being ignored for purposes of calculating Losses under this Agreement; provided, however, that a series of related Losses arising out of the same facts and events shall be deemed to constitute a single Loss;
(ii) to the extent that any provision or reserve in respect of the matter giving rise to such claim has been provided for in the Financial Statements, which provision or reserve remains in effect or has not been released as of the close of business on the day preceding the Closing Date;
(iii) to the extent that the matter giving rise to such claim resulted in an adjustment to the Purchase Price based on the Actual Net Working Capital;
(iv) to the extent that such claim relates to any Loss for which Buyer or such Seller Indemnified Person is insured and actually recovers thereunder, but only to the extent of net insurance proceeds actually recovered; and
(v) to the extent that such claim relates to any Loss for which Buyer or any Seller Indemnified Person, as applicable, collects a recovery from any third party, but only to the extent of collections actually received. Buyer shall use its commercially reasonable efforts to obtain all of their respective remedies against applicable insurers, third parties, indemnitors or contributors prior to seeking indemnification hereunder; provided, however, that the foregoing limitation shall not prevent Buyer from providing notice of any Losses to Seller or the Seller Representative pursuant to this Article 11; provided, further, that in the event Buyer cease to pursue, or determine that it would not be commercially reasonable to pursue, all of its remedies against such insurers, third parties, indemnitors or contributors, Buyer shall assign to Seller and Seller Representative, upon the request of Seller or Seller Representative, all of the rights of Buyer and the Company Group to pursue their respective remedies against such insurers, third parties, indemnitors or contributors. If Buyer or the Company Group actually receives any amounts under applicable insurance policies, or from any other person alleged to be responsible for any Losses, subsequent to an indemnification payment by the Escrow Amount, then Buyer shall promptly reimburse (or cause the Company Group to reimburse) the Escrow Amount for any payment actually made or expense incurred by Seller or the Seller Representative in connection with providing such indemnification payment up to the actual amount received by Buyer, net of any unindemnified expenses incurred by Buyer in collecting such amount.
(f) Notwithstanding anything in this Agreement to the contrary contained hereincontrary, in the Indemnification Escrow (i) claims for indemnification arising out of a breach by either party of its obligations under paragraph 2.1(e), or paragraphs 11.3(ii) or 11.4(ii) of this Agreement, (ii) the Working Capital Escrow payment by Buyer of any amounts due pursuant to this Agreement (including pursuant to paragraphs 1.1, 1.4, 1.6, 2.1 and 3.1), (iii) the obligations of Buyer pursuant to the Assumption and Indemnification Agreement, (iv) claims by Seller for indemnification arising out of Buyer’s breach of paragraph 5.7, or (v) claims attributable to or arising out of the Excluded Corporations or the Stockholder Representative Agreement, and in any distribution by Company of the agreements contemplated hereby or therebystock of the Excluded Corporations, the maximum aggregate liability of any Company Stockholder shall not be subject to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability various limitations on indemnification set forth in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderthis paragraph 11.5.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Seller's obligations to indemnify any Indemnified Parties Buyer Party under this Article XI is subject to, and limited by, the following:
(i) Seller shall not be entitled to recover liable for any Losses unless General Claims, Environmental Claims, and claims listed as Items 1, 2, 3 and 5(a) on Schedule 11.2(4) (collectively, "Deductible Claims") hereunder or for any reserve adjustment calculated pursuant to Exhibit A ("Reserve Adjustment") until such time as the Losses in the aggregate dollar amount of Losses relating to such Deductible Claims or Reserve Adjustment equals $1,000,000, after which xxxx Xxxxxx will be liable for, and shall indemnify Indemnified Buyer Parties with respect to, only such Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunderDeductible Claims or Reserve Adjustments that exceed such $1,000,000 minimum; provided, including the indemnification for Taxes set forth in Article 7however, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties that Seller shall be entitled liable and shall indemnify the Indemnified Buyer Parties for any Tax Claims and for any claims relating to recover all such Losses in excess of Item 5(b) on the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersattached Schedule 11.2(4) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect hereto without regard to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss$1,000,000 minimum; and
(ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The maximum aggregate liability of any Company Stockholder Seller for damages indemnification for all Losses and Reserve Adjustments subject to indemnification under this Agreement Article XI shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit$13,000,000.
(b) Each Loss for which Buyer's obligations to indemnify any Indemnified Seller Party under this Article XI is subject to, and limited by, the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by following:
(i) Buyer shall not be liable for any inaccuracy in or any breach of any representation, warranty, covenant or agreement of Buyer or GNC contained in this Agreement or in any Schedule, Exhibit or certificate (including any attachments thereto), delivered by Buyer or GNC pursuant hereto or thereto, until the aggregate dollar amount of any insurance proceeds Losses relating to such claims equals $1,000,000, after which the Company Stockholder time Buyer will be liable for, and shall indemnify Indemnified Seller Parties recover with respect to, only such Losses that exceed such $1,000,000 minimum; provided that, notwithstanding the foregoing limitation, Buyer shall be liable and shall indemnify the Indemnified Seller Parties for any Losses relating to such LossGNC's breach of the terms and conditions of the Assignment of Leases; and provided further that nothing contained herein is intended or shall be construed to prevent Seller from exercising any remedy arising under the Assignment of Leases directly against GNC in the event of such breach.
(ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect The maximum aggregate liability of Buyer for indemnification for all Losses subject to such Lossindemnification under this Article XI shall be $13,000,000.
(c) This Section 6.8 is Buyer and Seller agree that any payments required to be made by either Buyer or Seller, respectively, in no way intended respect of such party's indemnification of any Indemnified Seller Party or Indemnified Buyer Party, respectively, shall be made, without duplication or double-counting, only to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.Seller or Buyer, respectively;
(d) Notwithstanding anything The indemnification provided under this Article XI shall be the sole remedy of any party to this Agreement against any other party for any claim covered by such indemnification other than claims for specific performance or injunctive relief. In no event shall either party seek or be entitled to a rescission of this Agreement;
(e) Except to the contrary contained hereinextent not permitted by the Code, in Seller and Buyer agree that any indemnification payments pursuant to this Article XI and Exhibit A will constitute an adjustment to the Indemnification Escrow Agreement, Purchase Price; and
(f) Subject to the Working Capital Escrow Agreement, or provisions of Exhibit A governing the Stockholder Representative Agreement, and in any calculation of the agreements contemplated hereby or therebyReserve Adjustment, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration any Loss for which indemnification is owed under this Article XI shall be net of any amounts actually received recovered by the indemnified party under insurance policies or reinsurance agreements of the Company in effect prior to or as of the Closing with respect to such Company Stockholder.Loss (including any tail coverage purchased by Seller as described on Schedule 2.24) and shall be
Appears in 1 contract
Limitations on Indemnification Obligations. Notwithstanding anything to the contrary in this Article VIII:
(a) The Purchaser Indemnified Parties Indemnitees shall not be entitled to recover Losses for any Losses unless and until such time as breach of any Seller Fundamental Representation pursuant to this Article VIII in excess of a maximum aggregate amount of the Losses in the aggregate for which the Enterprise Value.
(b) The Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties Indemnitees shall not be entitled to recover all Losses pursuant to Section 8.01(a) for any breach of any representation or warranty attributable to a single course of conduct or related set of facts, events or circumstances unless the amount of Losses incurred or suffered by the Purchaser Indemnitees for such breach exceeds $250,000.
(c) The Purchaser Indemnitees shall not be entitled to recover Losses pursuant to Section 8.01(a) until the aggregate amount which the Purchaser Indemnitees would recover under Section 8.01(a) exceeds $14,000,000, in which case the Purchaser Indemnitees shall only be entitled to recover such Losses in excess of such amount, up to a maximum aggregate amount of Losses recovered under Section 8.01(a) of $35,000,000.
(d) For the avoidance of doubt, the limitations on Seller’s indemnification obligations as set forth in Section 8.05(a), Section 8.05(b) and Section 8.05(c) above shall not apply to the recovery of any Losses by the Purchaser Indemnitees for any breach by Seller relating to covenants and agreements contained in this Agreement, or otherwise for Excluded Assets, Excluded Liabilities, Pre-Closing Taxes or the Restructuring.
(e) The Seller Indemnitees shall not be entitled to recover Losses for any breach of the Purchaser Fundamental Representations pursuant to this Article VIII in excess of a maximum aggregate amount of the Enterprise Value.
(f) The Seller Indemnitees shall not be entitled to recover Losses pursuant to Section 8.02(a) for any breach of any representation or warranty attributable to a single course of conduct or related set of facts, events or circumstances unless the amount of Losses incurred or suffered by the Seller Indemnitees for such breach exceeds $250,000.
(g) For the avoidance of doubt, the limitations on Purchaser’s indemnification obligations as set forth in Section 8.05(e) and Section 8.05(f) above shall not apply to the recovery of any Losses by the Seller Indemnitees for any breach by Parent or Purchaser relating to covenants and agreements contained in this Agreement and Business Assets and Business Liabilities.
(h) The Purchaser Indemnitees shall not be entitled to recover Losses pursuant to this Article VIII to the extent that such Losses were included in the calculation of Closing Working Capital and reflected or reserved for on the final Closing Statement setting forth the Actual Adjustment Amount.
(i) Each Indemnified Party shall use commercially reasonable efforts to collect any available third party insurance proceeds (“Insurance Proceeds”), in respect of any Loss; provided that such Indemnified Party need not attempt to so collect prior to making a claim for indemnification or receiving an indemnity payment in respect of such Loss under this Article VIII, (ii) any Loss for which an Indemnified Party may make a claim shall be reduced by any Insurance Proceeds actually collected by such Indemnified Party in respect of such Loss (net of any Taxes arising from the receipt of such Insurance Proceeds), (iii) if an Indemnified Party receives an indemnity payment in respect of a Loss under this Article VIII and subsequently collects any Insurance Proceeds in respect of such Loss, such Indemnified Party shall pay to the Indemnifying Party an amount equal to the excess of such indemnity payment received over the amount of such indemnity payment that would have been due if such Insurance Proceeds (net of any Taxes arising from the receipt of such Insurance Proceeds) had been collected before such indemnity payment was made, and (v) the Purchaser Loss Threshold. Except Indemnitees shall not be entitled to recover Losses (other than Taxes) for those any matter to the extent specifically reserved against in the Business Financial Statements (or the notes thereto).
(j) None of Seller or any of its Subsidiaries shall have any obligation under Section 8.01(a) to indemnify, defend and hold harmless the Purchaser Indemnitees from and against any and all Losses which arise out any Purchaser Indemnitee may incur or suffer to the extent such Losses (x) relate to any environmental, health or safety matters, including matters arising under Environmental Laws, and (y) result from, or with respect to clause (ii) below only, would not have arisen but for, or are increased by any of the indemnification for Taxes under Article 7 following:
(i) Parent, Purchaser or a breach any of their respective Subsidiaries undertaking any subsurface soil or groundwater investigation relating to any soil or groundwater conditions at any Business Property that have not been discovered through prior investigation as of the representations Closing, and warranties contained where such investigation is not:
(A) required to comply with (x) an order, consent decree or similar binding instrument of a Governmental Entity with jurisdiction over such Business Property and the environment, safety or health, (y) Environmental Laws or (z) Environmental Permits;
(B) approved in Section 2.1 writing by Seller in its sole discretion;
(OrganizationC) in response to a bona fide third party or employee claim relating to a risk or harm to environmental or human health or safety matters; provided any voluntary sampling must be reasonably limited in scope to evaluate the specific allegation in the claim; or
(D) taken in connection with the cessation, closing, abandoning, decommissioning or terminating, in each case in the ordinary course of business, of current mining or manufacturing activities at such Business Property after the Closing, or otherwise in connection with repair, maintenance, replacement or construction activities at any Business Property, in each case in the ordinary course of business after the Closing (and not with the primary purpose of establishing a claim for Losses relating to any environmental, health or safety matters), Section 2.2 in each case, where soil and groundwater investigations are both customary and necessary in the reasonable judgment of Purchaser or its Subsidiaries in connection with any of the foregoing activities;
(Subsidiariesii) a change in the use of any Business Owned Property to non-industrial purposes after the Closing (but this clause (ii) shall not apply to transfers to third-parties, provided that such transfers will not result in a change of use to a non-industrial purpose);
(iii) any act or omission by Parent, Purchaser or any of their respective Subsidiaries that (A) is reckless or grossly negligent, or (B) results in any exacerbation or worsening of any pre-Closing condition; or
(iv) any notification, report, admission or disclosure by Parent, Purchaser or any of their respective Subsidiaries of any pre-Closing condition to any Governmental Entity or other third party other than (A) as required to comply with (x) an order, consent decree or similar binding instrument of a Governmental Entity with jurisdiction over such Business Property and the environment, safety or health, (y) Environmental Laws or (z) Environmental Permits, (B) such notifications, reports, admissions or disclosures that are made by Parent, Purchaser or any of its subsidiaries in the ordinary course of business (and not with the primary purpose of establishing a claim for Losses relating to any environmental, health or safety matters), Section 2.4 (Execution C) as approved in writing by Seller in its sole discretion or (D) in response to a bona fide third party or employee claim relating to a risk or harm to environmental or human health or safety matters; provided any such notifications, reports, admissions or disclosures must be reasonably limited in scope to address the specific allegation in the claim; or
(v) any failure to comply with the following cleanup standards in connection with any Remedial Action undertaken at any Business Property after the Closing: the Remedial Action shall be undertaken in a reasonable and Delivery)cost-effective manner, Section 2.6 (Capitalization)which should include, and Section 2.16 (Tax Matters) where available, natural attenuation, the use of risk-based cleanup standards or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceeddeed restrictions and, with respect to a Business Property, shall be to cleanup standards no more stringent than those that apply to industrial properties; provided that satisfaction of the foregoing limitations does not materially burden or interfere with the activities and operations of Parent, Purchaser or any Company Stockholder, an amount equal to $6.0 million, and of their respective Subsidiaries at any of the Business Properties or otherwise in any event Losses with respect relation to the indemnification for Taxes Business.
(k) None of Seller or any of its Affiliates shall have any obligation under Article 7 Section 8.01 to indemnify, defend and hold harmless the Purchaser Indemnitees from and against any and all Losses which any Purchaser Indemnitee may incur or suffer to the extent that such Losses result from or are increased by a Purchaser Tax Act.
(l) All Losses shall be net of any Tax Benefit actually realized by the Indemnified Party or its Affiliates in connection with respect to breaches the incurrence of Sections 2.1 such Losses in (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalizationor prior to) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for taxable year in which the Purchaser applicable indemnity payment is received or in the subsequent taxable year; provided that (A) if a realized Tax Benefit that has been taken into account under this Section 8.05(l) is rendered unavailable by reason of a carryback of any Tax asset from a subsequent period or due to any other subsequent event, the Indemnifying Party shall make an appropriate reconciliation payment to the Indemnified Parties are entitled Party (provided further that to be indemnified hereunder the extent the Indemnified Party is permitted under applicable Law to waive a carryback, the Indemnified Party shall be reduced by deemed to have made an election to that effect) or (iB) if a Tax Benefit is not included in the computation of a Loss and is subsequently realized, the Indemnified Party shall pay to the Indemnifying Party the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by as promptly as practicable following the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount actual realization of such Tax Benefit.
(bm) Each Loss for which the Company Stockholder The Indemnified Parties are entitled Party shall take reasonable steps to be indemnified hereunder shall be reduced by (i) the amount mitigate or resolve all indemnifiable Losses upon and after becoming aware of any insurance proceeds event which could reasonably be expected to give rise to any Losses hereunder. In the Company Stockholder event that the Indemnified Parties recover with respect Party shall fail to take such Loss; and (ii) reasonable steps to mitigate or resolve any indemnitysuch Losses, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding then notwithstanding anything else to the contrary contained herein, in the Indemnification Escrow Agreement, Indemnifying Party shall not be required to indemnify any Person to the Working Capital Escrow Agreement, extent such Loss could reasonably be expected to have been avoided if the Indemnified Party had taken such steps.
(n) None of Seller or the Stockholder Representative Agreement, and in any of its Affiliates shall have any obligation under Section 8.01 to indemnify, defend and hold harmless the agreements contemplated hereby Purchaser Indemnitees from and against (i) any and all Taxes attributable any taxable period (or therebyportion thereof) beginning after the Closing Date or (ii) any and all Losses which any Purchaser Indemnitee may incur or suffer to the extent that such Losses are related to the existence, the maximum aggregate liability amount or usability of any Company Stockholder to the Purchaser and Merger Subnet operating loss, whether by reason of indemnificationcapital loss, reimbursement Tax basis or other payment obligation of any typeTax attributes, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholdereach case other than Pre-Closing Taxes.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees and the Seller Indemnitees to indemnification pursuant to the provisions of Section 11.2 are subject to the following limitations:
(a) The Purchaser Indemnified Parties Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 11.2(a)(i) or Section 11.2(a)(ii)(A) until the total amount of Losses which the Buyer Indemnitees would recover under Section 11.2(a)(i) and Section 11.2(a)(ii)(A), but for this Section 11.4(a), exceeds two million dollars ($2,000,000) (the “Basket Amount”), in which case, the Buyer Indemnitees shall be entitled to recover Losses (including all Losses comprising the Basket Amount), except that claims related to any breach or inaccuracy in the Seller Fundamental Representations and Warranties shall not be subject to the Basket Amount.
(b) The Seller Indemnitees shall not be entitled to recover Losses pursuant to Section 11.2(b)(i) or Section 11.2(b)(ii)(A) until the total amount of Losses which the Seller Indemnitees would recover under Section 11.2(b)(i) and Section 11.2(b)(ii)(A) but for this Section 11.4(b), exceeds the Basket Amount, in which case, the Seller Indemnitees shall only be entitled to recover Losses (including all Losses comprising the Basket Amount), except that claims related to any breach or inaccuracy in the Buyer Fundamental Representations and Warranties shall not be subject to the Basket Amount.
(c) The Buyer Indemnitees shall not be entitled to recover for any Losses particular Loss (including any series of related Losses) pursuant to Section 11.2(a)(i) or Section 11.2(a)(ii)(A) unless and until such time as Loss (including any series of related Losses) equals or exceeds $25,000 (the Losses “De Minimis Threshold”) nor shall any Loss that does not meet the De Minimis Threshold be considered in determining whether the Basket Amount has been met; provided, however, that claims related to any breach or inaccuracy in the aggregate for which the Purchaser Indemnified Parties are entitled to Seller Fundamental Representations and Warranties shall not be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect subject to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this AgreementDe Minimis Threshold.
(d) Notwithstanding anything The Seller Indemnitees shall not be entitled to recover for any particular Loss (including any series of related Losses) pursuant to Section 11.2(b)(i) or Section 11.2(b)(ii)(A) unless such Loss (including any series of related Losses) equals or exceeds the De Minimis Threshold nor shall any Loss that does not meet the De Minimis Threshold be considered in determining whether the Basket Amount has been met; provided, however, that claims related to any breach or inaccuracy in the Buyer Fundamental Representations and Warranties shall not be subject to the contrary contained hereinDe Minimis Threshold.
(e) Subject to the last paragraph of Section 11.2(a), Mxxxxx Sxxxxxx, Parent, the Group Companies and Seller shall have no liability under this Agreement to any Buyer Indemnitee for Losses in respect of Loss Sharing Claims other than pursuant to Section 11.2(a)(iii).
(f) Other than Losses arising out of fraud or any breach or inaccuracy in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, Seller Fundamental Representations and in any of the agreements contemplated hereby or therebyWarranties, the maximum aggregate liability of Mxxxxx Sxxxxxx, Parent, the Group Companies and Seller with respect to Losses indemnifiable pursuant to Section 11.2(a)(i) and Section 11.2(a)(ii)(A) shall be $5,928,700.
(g) Other than Losses arising out of fraud or any Company Stockholder breach or inaccuracy in the Buyer Fundamental Representations and Warranties, the maximum aggregate liability of Buyer and OFC with respect to Losses indemnifiable pursuant to Sections 11.2(b)(i) and Section 11.2(b)(ii)(A) shall be $5,928,700.
(h) The amount of any and all Losses shall be determined net of (i) any amounts actually recovered by the Indemnified Party under insurance policies or from other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses and (ii) any Tax benefits actually received with respect to such Losses.
(i) The Buyer Indemnitees shall not be entitled to indemnification pursuant to Section 11.2(a) for any Loss to the Purchaser extent that (i) such Loss was taken into account in the determination of the Final Purchase Price pursuant to Section 2.5 or (ii) the Buyer Indemnitees failed to mitigate or prevent such Loss as required by Law.
(j) The Buyer Indemnitees and Merger Subthe Seller Indemnitees, whether by reason in each case, shall not be entitled to recover or make a claim for any amounts in respect of indemnificationconsequential, reimbursement incidental, special or indirect damages, lost profits or punitive damages and, in particular, no “multiple of profits” or “multiple of cash flow” or other payment obligation of any type, any liability similar valuation methodology based upon multiples shall be used in tort, contract or otherwise, shall never exceed calculating the amount of Common Merger Consideration actually received any Losses, except to the extent such damages are recovered by third parties in connection with claims made by such Company Stockholderthird parties that are indemnified under this Agreement.
(k) In any case where a Indemnified Party recovers, under insurance policies or from other collateral sources, any amount in respect of a matter for which such Indemnified Party was indemnified pursuant to Section 11.2(a) or Section 11.2(b), as applicable, such Indemnified Party shall promptly pay over to the Responsible Party the amount so recovered (after deducting therefrom the amount of the expenses incurred by such Indemnified Party in procuring such recovery), but not in excess of the sum of (i) any amount previously so paid by the Responsible Party to or on behalf of such Indemnified Party in respect of such matter and (ii) any amount expended by the Responsible Party in pursuing or defending any claim arising out of such matter.
Appears in 1 contract
Limitations on Indemnification Obligations. Notwithstanding anything to the contrary contained herein, the rights to indemnification pursuant to the provisions of Section 11.02 are subject to the following limitations.
(a) The Purchaser Indemnified Parties With respect to the matters described in Section 11.02(a), the aggregate maximum amount of Losses recoverable by the Buyer Indemnitees shall not, except in cases of fraud (claims for which shall be limited to the portion of the Closing Cash Payment received by each of the Unitholders on a several and not joint basis), exceed the Indemnification Escrow Fund then available (the "Unitholder Cap").
(b) No indemnification under Section 11.02(a)(i) or Section 11.02(a)(ii) shall be available unless and until the aggregate Losses of the Buyer Indemnitees under such section exceed the Indemnification Deductible, in which case, indemnification (solely from the Indemnification Escrow Fund) under such section shall, subject to the Unitholder Cap and other limitations set forth in this Agreement, be available for all Losses in excess of the Indemnification Deductible; provided, however, that the Indemnification Deductible shall not apply to Losses arising from breaches of a Fundamental Representation or Section 5.15(b). Without limiting the foregoing, the Buyer Indemnitees shall not be entitled to recover indemnification under Section 11.02(a)(i) or Section 11.02(a)(ii), and no such claim by any Buyer Indemnitees shall be so asserted, if the Losses relating to or resulting from such claim or other claims relating to or resulting from the same facts, events or circumstances are less than $50,000. For purposes of determining whether or not a breach of a representation or warranty has occurred all qualifications or limitations as to "materiality," "in all material respects" or "Material Adverse Effect" and words of similar import set forth therein shall be taken into account, but for any purposes of determining Losses hereunder, all qualifications or limitations as to "materiality," "in all material respects" or "Material Adverse Effect" and words of similar import set forth therein shall be disregarded.
(c) No indemnification under Section 11.02(b)(i) shall be available unless and until such time as the Losses in the aggregate for Losses of the Unitholder Indemnitees under such section exceed the Indemnification Deductible, in which case, indemnification under such section shall, subject to the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes limitations set forth in Article 7this Agreement, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover available for all such Losses in excess of the amount Indemnification Deductible; provided, however, that the Indemnification Deductible shall not apply to Losses arising from breaches of a Fundamental Representation. Without limiting the Purchaser Loss Thresholdforegoing, the Unitholder Indemnitees shall not be entitled to indemnification under Section 11.02(b)(i), and no such claim by any Unitholder Indemnitees shall be so asserted, if the Losses relating to or resulting from such claim or other claims relating to or resulting from the same facts, events or circumstances are less than $50,000. Except for those Losses which arise out For purposes of the indemnification for Taxes under Article 7 determining whether or not a breach of the representations a representation or warranty has occurred all qualifications or limitations as to "materiality," "in all material respects" or "Material Adverse Effect" and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches words of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder similar import set forth therein shall be reduced by (i) the amount taken into account, but for purposes of any insurance proceeds which the Purchaser Indemnified Parties recover with respect determining Losses hereunder, all qualifications or limitations as to such Loss; (ii) any indemnity, contribution "materiality," "in all material respects" or other "Material Adverse Effect" and words of similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement import set forth therein shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementdisregarded.
(d) Notwithstanding anything to the contrary contained hereinin this Agreement, (i) the Buyer Indemnitees shall not be entitled to recover any Losses to the extent reflected or reserved for on the Financial Statements or included in the calculation of any component of the Closing Cash Payment, including any Loss that is included with as a Liability in the calculation of the Working Capital, and (ii) the Buyer Indemnitees shall have no claim under this ARTICLE XI to the extent arising from actions taken or not taken by the Buyer Indemnitees, or any event or occurrence occurring, after Closing.
(e) The Parties acknowledge and agree that the same Loss may be subject to indemnification under more than one subsection of Section 11.02; provided, however, that, in no event shall the Indemnification Escrow AgreementUnitholder Indemnitees, on the Working Capital Escrow Agreementone hand, or the Stockholder Representative AgreementBuyer Indemnitees, on the other hand, be entitled to duplicative recoveries for the same underlying Loss.
(f) Notwithstanding the foregoing, the Buyer Indemnitees shall not have any right to indemnification with respect to any environmental matter or condition, including arising under Environmental Laws or relating to Hazardous Materials, or any Losses relating thereto, to the extent that: (i) such matter or condition is discovered or detected by any testing, sampling, or other intrusive investigation or any reporting to any Governmental Authority, by or on behalf of any Buyer Indemnitee, including at the Owned Real Property or Leased Real Property, except to the extent such testing, sampling or other intrusive investigation or reporting is (A) affirmatively required to comply with Environmental Law or is directed to be conducted by a Governmental Authority; or (B) necessary to comply with any legal requirements arising out of a judicial order, suit or action or to comply with an order by a Governmental Authority; (ii) arises from or relates to any maintenance, removal or abatement of asbestos or asbestos-containing building materials (other than such asbestos or asbestos containing material in friable form and the condition of which as of Closing requires removal, abatement or encapsulation by a Buyer Indemnitee to comply in all material respects with Environmental Law); or (iii) is caused, accelerated or exacerbated in any material respect by any act or omission by or on behalf of any Buyer Indemnitee. Indemnification in favor of Buyer Indemnitees shall be limited to such cost effective action that is reasonably necessary to achieve the minimum applicable remedial standards allowable under Environmental Law for continued industrial use of the agreements contemplated hereby relevant property or therebyfacility, employing where applicable risk-based remedial standards, land use restrictions and institutional controls, where such standards, restrictions or controls would not unreasonably interfere with ongoing industrial or commercial operations at the maximum aggregate liability relevant property or facility.
(g) Buyer Indemnitees shall not have any right to indemnification under Section 11.02(a) or otherwise under this Agreement with respect to the representations and warranties under Section 4.02(g) and Section 5.15 to the extent such Losses or Taxes (i) are attributable to taxable periods (or portions thereof) beginning after the Closing Date, (ii) are due to the unavailability in any taxable period (or portion hereof) beginning after the Closing Date of any Company Stockholder net operating losses, credits or other Tax attribute from a taxable period (or portion thereof) ending on or prior to the Purchaser and Merger SubClosing Date, whether by reason or (iii) that result from the breach of indemnification, reimbursement the covenant in Section 8.02.
(h) The amount of any Loss shall be calculated net of any amounts recovered under any insurance policies or from other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement). The Indemnified Party shall use commercially reasonable efforts to seek recovery under all insurance policies covering any Loss to the same extent as they would if such Loss were not subject to indemnification hereunder. In the event that an insurance or other payment obligation of recovery is received by any typeIndemnified Party, in each case with respect to any liability in tortLoss for which any such Person has been indemnified hereunder, contract or otherwise, shall never exceed then a refund equal to the amount of Common Merger Consideration actually received by the recovery shall be made promptly to the Indemnifying Party that made or directed such Company Stockholderindemnification payments to such Indemnified Party.
(i) Prior to the Closing, notwithstanding anything to the contrary contained in this Agreement, none of the provisions of this ARTICLE XI shall apply to or limit the Company's and the Unitholders' right to recover from Buyer if Buyer fails to consummate the Transactions.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights to indemnification pursuant to the provisions of this Agreement are subject to the following limitations:
(a) The Purchaser Indemnified Parties the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.1(a) (other than Losses unless and relating to breaches of the Fundamental Representations) until such time as the total amount of Losses in the aggregate for (or series of related Losses) which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Buyer Indemnitees would recover under Section 8.1(a) exceeds $250,000 275,000 (the "Purchaser Loss Threshold"“Deductible”), at which time and to the Purchaser Indemnified Parties extent Losses claimed exceed the Deductible, the Buyer Indemnitees shall be entitled to recover all such Losses in excess of the Deductible;
(b) the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.1(a) relating to breaches of Section 4.12 (Financial Statements) until the total amount of Losses (or series of related Losses) which the Purchaser Loss Threshold. Except for those Losses which arise out of Buyer Indemnitees would recover under Section 8.1(a) exceeds $250,000 (the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization“Financial Statements Deductible”), and Section 2.16 (Tax Matters) or actual fraudto the extent Losses claimed exceed the Financial Statements Deductible, the Buyer Indemnitees shall be entitled to recover all Losses in excess of the Financial Statements Deductible. The Parties acknowledge that they have engaged in extensive discussion together and in conjunction with the Company’s auditors regarding the calculation of EBITDA, the amount of accounts receivable, the allowance for doubtful accounts, and working capital, in each case, of the Group Companies and as set forth on the attached Exhibit E. The Parties acknowledge their agreement with Exhibit E based upon the facts and circumstances as known at such time of agreement, and further acknowledge and agree that no event shall the Losses for which the Purchaser Indemnified Parties are entitled to indemnification claims can be indemnified hereunder exceed, made by Buyer (i) with respect to the matters set forth on Exhibit E, unless such indemnification claims are based on the development and/or disclosure of, facts and/or circumstances, which such facts and circumstances were not taken into account in the preparation of Exhibit E, thereby resulting in an error and/or omission with respect to the matters contained in Exhibit E and (ii) for any Company Stockholder, Losses solely arising from any restatements of the Financial Statements resulting from changes to applicable accounting rules or regulations or a change in interpretation of such accounting rules or regulations or a change in a policy or practice at Buyer or Buyer’s Affiliates election from historical policy or practice; and
(c) the Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 8.1 in the aggregate in excess of an amount equal to $6.0 million, and in any event Losses with respect to forty percent (40%) of the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 Purchase Price (Organizationthe “Cap”), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect other than Losses relating to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; Pre-Closing Taxes, (ii) any indemnitybreach of any covenant made by Seller in this Agreement, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to fraud committed by the Seller or any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability its Affiliates or (iv) any breach of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitFundamental Representation.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Radiation Therapy Services Holdings, Inc.)
Limitations on Indemnification Obligations. (a) The Purchaser Notwithstanding Section 5.1, there shall be no liability for indemnification under Section 5.1(a) unless the aggregate amount of Losses under this Agreement exceeds [***] (the “Seller Indemnification Threshold”), at which xxxx Xxxxxx will be obligated to indemnify the Buyer Indemnified Parties with respect to the aggregate amount of all Losses described in Section 5.1(a) in excess of such Seller Indemnification Threshold; provided that the Seller Indemnification Threshold shall not be entitled to recover for any Losses unless and until such time as the Losses apply in the case of fraud, intentional or knowing misrepresentation or willful breach or to the breach of or inaccuracy in any representation or warranty made by Seller in any of the Seller Fundamental Representations.
(b) Notwithstanding Section 5.2, there shall be no liability for indemnification under Section 5.2(a) unless the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 amount of Losses thereunder exceeds [***] (the "Purchaser Loss “Buyer Indemnification Threshold"”), at which time Buyer will be obligated to indemnify the Purchaser Seller Indemnified Parties shall be entitled with respect to recover the aggregate amount of all such Losses described in Section 5.2(a) in excess of such Buyer Indemnification Threshold; provided that the amount Buyer Indemnification Threshold shall not apply to the breach of or inaccuracy in any representation or warranty made by Buyer in any of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 following: Sections: 3.1 (Due Organization), 3.2 (Authorization; No Conflict) and 3.6 (Brokers and Agents).
(c) The indemnification obligations of Seller under Section 2.2 5.1(a) shall be limited to [***] of the Purchase Price (Subsidiariesthe “Lower Cap”), provided, however, that the Lower Cap shall not apply to Seller’s indemnification obligations under Section 2.4 5.1(a) for breaches of or inaccuracies in any of the Seller Fundamental Representations, which obligations (Execution and Deliverywhen aggregated with Seller’s other indemnification obligations under Section 5.1(a)) shall be limited to an amount equal to [***], Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual in the case of fraud, intentional or knowing misrepresentation or willful breach.
(d) The indemnification obligations of Buyer under Section 5.2 shall be limited to an amount equal to [***].
(e) Notwithstanding anything to the contrary in this Agreement:(i) Buyer shall have no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, obligations under Section 5.2 with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss matter for which the Purchaser any Buyer Indemnified Parties are Party is or would be entitled to be indemnified hereunder indemnification under Section 5.1 (without giving effect to any limitations, including as to time, survival periods, deductibles, thresholds, caps, knowledge or materiality qualifiers); (ii) if a Party is entitled to bring a claim under more than one provision of Section 5.1 or 5.2, as the case may be, such Party may choose in its sole and absolute discretion the provision or provisions under which it seeks indemnification; and (iii) Seller shall be reduced obligated to pay, by wire transfer of immediately available funds, any indemnification obligation owed to any Buyer Indemnified Party as set forth herein rather than such obligation being satisfied by offset pursuant to Section 5.6.
(if) The amount of Losses recoverable by the Indemnified Party under this Article V shall be reduced, on a dollar-for-dollar basis, by the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by the Indemnified Party in connection with a Claim under this Article V under any insurance policies (net of any applicable fees and expenses incurred in connection with obtaining such Company Stockholderamounts, including reasonable attorneys’ fees and other advisors’ fees). If a Tax Benefit attributable the Indemnified Party receives any amounts under applicable insurance policies, or from any other Person alleged to a Loss is realized be responsible for any Losses, subsequent to an indemnification payment by the Purchaser indemnifying Party, then such Indemnified Parties after Party shall promptly reimburse the taxable year indemnifying party for any payment made or expense incurred by such Indemnified Party in connection with providing such indemnification payment up to the amount received by the Indemnified Party, net of any expenses incurred by such Indemnified Party in collecting such amount. Upon the payment of any indemnification claim under this Agreement, the Lossindemnifying party shall, Purchaser shall pay to each Company Stockholder an amount in cash equal the extent of such payment, be subrogated to such stockholder's Pro Rata Portion all rights of the amount Indemnified Party against any insurer of the Indemnified Party in respect of the Losses to which such Tax Benefitpayment relates, unless prohibited by the terms of the Contract with such insurer. The Indemnified Party and indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect the foregoing subrogation rights.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(dg) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow this Agreement, for purposes of determining (i) whether there has been a breach requiring Seller to indemnify as provided in Section 5.1 and (ii) the Working Capital Escrow AgreementLosses with respect thereto, each representation, warranty, covenant and agreement made by Seller, whether made herein or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby other document, agreement or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability instrument delivered in tort, contract or otherwiseconnection herewith, shall never exceed the amount of Common Merger Consideration actually received be deemed to have been made without any qualifications or limitations as to materiality (including any qualifications or limitations made by such Company Stockholderreference to a Material Adverse Change).
Appears in 1 contract
Samples: Asset Purchase Agreement (Syros Pharmaceuticals, Inc.)
Limitations on Indemnification Obligations.
(a) The Purchaser Subject to the other limitations contained in this Section 8.05, neither Buyer nor Buyer Indemnified Parties Persons shall not be entitled seek indemnification pursuant to recover Section 8.02(a) (other than for an intentional breach of any agreement or covenant contained in this Agreement or for breach of Seller’s Fundamental Representations) unless the aggregate amount of Losses unless incurred by Buyer and until such time as Buyer Indemnified Persons under this Agreement exceeds one percent (1%) of the Losses Purchase Price in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"“Threshold Amount”), at in which time the Purchaser Indemnified Parties shall case Seller will then be entitled to recover all such liable only for Losses in excess of the Threshold Amount, except that the limitations contained in this Section 8.05(a) do not apply to any claims for indemnification based on fraud, intentional misrepresentation or willful misconduct.
(b) Subject to the other limitations contained in this Section 8.05 neither Seller nor the Seller Indemnified Persons shall seek indemnification pursuant to Section 8.03(a) (other than for an intentional breach of any agreement or covenant contained in this Agreement) unless the aggregate amount of Losses incurred by Seller and Seller Indemnified Persons under this Agreement exceeds the Purchaser Loss Threshold. Except Threshold Amount, in which case Buyer will then be liable only for those Losses which arise out in excess of the indemnification for Taxes under Article 7 or a breach of Threshold Amount, except that the representations and warranties limitations contained in this Section 2.1 8.05(a) do not apply to any claims for indemnification based on fraud, intentional misrepresentation or willful misconduct.
(Organizationc) Except in the case of fraud, intentional misrepresentation or willful misconduct (for which all applicable legal and equitable remedies will be available to Buyer), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Buyer Indemnified Parties are shall only be entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes assert claims under Article 7 or Section 8.02(a) (other than claims with respect to breaches of Sections 2.1 any of the Seller Fundamental Representations, which are not limited by this Section 8.05(c)) up to the aggregate amount of five percent (Organization5%) of the Purchase Price (the “Liability Cap”), 2.2 which represents the sole and exclusive remedy of Buyer and the other Buyer Indemnified Parties for any such claims under Section 8.02(a) (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed other than claims with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion breaches of any of the Common Merger Consideration actually received Seller Fundamental Representations or in the case of fraud, intentional misrepresentation or willful misconduct which are not subject to the Liability Cap, but is capped at the Purchase Price).
(d) Payments by such Company Stockholder. Each an Indemnifying Party pursuant to Section 8.02 or Section 8.03 in respect of any Loss for which the Purchaser Indemnified Parties are entitled is limited to be indemnified hereunder shall be reduced by (i) the amount of any liability or damage that remains after deducting therefrom any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) and any indemnity, contribution or other similar payment which received or reasonably expected to be received by the Purchaser Indemnified Parties receive from Party in respect of any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Lossclaim. The liability of any Company Stockholder for damages Indemnified Party shall use its commercially reasonable efforts to recover under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any policies or indemnity, contribution or other similar payment which agreements for any Losses before seeking indemnification under this Agreement.
(e) Payments by an Indemnifying Party pursuant to Section 8.02 or Section 8.03 in respect of any Loss will be reduced by an amount equal to any Tax benefit realized or reasonably expected to be realized as a result of such Loss by the Company Stockholder Indemnified Parties receive from Party.
(f) Each Indemnified Party shall take, and cause its Affiliates to take, all reasonable steps to mitigate any third party with respect Loss upon becoming aware of any event or circumstance that would be reasonably expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach that gives rise to such Loss.
(cg) This Section 6.8 is in no way intended Subject to affect the provisions of Sections 3.01, 7.06, 15.11 and any other provisions for equitable relief and/or specific performance, the Parties’ sole and exclusive remedy with respect to any and all claims for any breach of any representation, warranty, covenant, agreement or obligation of Purchaser set forth herein or otherwise relating to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms subject matter of this Agreement.
(d) Notwithstanding anything , the Parties shall pursue pursuant to the contrary contained hereinindemnification provisions set forth in this Article VIII. Each Party hereby waives, in to the Indemnification Escrow Agreementfullest extent permitted under Law, the Working Capital Escrow Agreementany and all rights, or the Stockholder Representative Agreement, claims and in causes of action for any of the agreements contemplated hereby or thereby, the maximum aggregate liability breach of any Company Stockholder representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the Purchaser subject matter of this Agreement it may have against the other Party and Merger Subtheir Affiliates and each of their respective Representatives arising under or based upon any Law, whether by reason of indemnification, reimbursement or other payment obligation of except pursuant to the indemnification provisions set forth in this Article VIII. Nothing in this Section 8.05(g) limits any type, Party’s right to seek and obtain any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderequitable relief and/or specific performance pursuant to this Agreement.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties maximum cumulative aggregate amount payable by Seller as Buyer Damages shall not be entitled subject to recover the following limitations:
(i) for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"obligations under Section 9.2(a), at which time other than breaches of Fundamental Representations and claims for fraud and knowing misrepresentation: the Purchaser Indemnified Parties Holdback Amount;
(ii) for indemnification obligations under Section 9.2(c): the Holdback Amount;
(iii) for indemnification obligations under Section 9.2(d) and Section 9.2(f): no cap; and
(iv) for indemnification obligations under Section 9.2(b) and Section 9.2(e): the Purchase Price.
(b) The maximum cumulative aggregate amount payable by the Signing Members as Buyer Damages shall be entitled subject to recover all such Losses the following limitations: for indemnification in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or connection with a breach of the representations and warranties of Signing Member contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder4.4, an amount equal to $6.0 million, and in any event Losses with respect to such Signing Member’s pro-rata share of the indemnification Holdback Amount; for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received Fundamental Representations made by such Company Stockholder. Each Loss Signing Member or for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount breaches of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to covenant or obligation of such Loss; (ii) any indemnitySigning Member in Section 8.12, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits such Signing Member’s pro-rata share of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such LossPurchase Price; and (ii) any indemnityfor claims for fraud and knowing mispresentation, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Lossno cap.
(c) This Other than for indemnification obligations under Section 6.8 is in 9.4(c) or 9.4(d), which shall have no way intended to affect cap, the obligation of Purchaser to deliver the Merger Consideration and the maximum aggregate amount payable by Buyer to any and all Seller Indemnitees for any and all Seller Damages arising out of, or in connection with, this Agreement and any of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementother Transaction Documents shall be $2,500,000.
(d) No claim for indemnification under Section 9.2(a), 9.3(a) or 9.4(a) may be asserted or be effective unless the aggregate amount of such claim (together with any other Claims), if successfully asserted, would entitle the Indemnified Party to recover an amount of Damages in excess of $70,000, in which case the Indemnifying Party shall be liable for all such Damages from the first dollar; provided, however, that the foregoing limitation shall not apply to breaches of Fundamental Representations and claims for fraud and knowing misrepresentation.
(e) If a party is entitled to bring a claim under more than one provision of Section 9.2, 9.3 or 9.4, as the case may be, such party may choose in its sole and absolute discretion the provision or provisions under which it seeks indemnification.
(f) Notwithstanding anything a party’s knowledge of any breach by the other party of any representation, warranty, covenant or agreement contained in this Agreement (and regardless of how the non-breaching party shall have acquired such knowledge), the non-breaching party shall have the right to consummate the contrary transactions provided for herein, and all of the non-breaching party’s rights and remedies with respect to such breach shall be preserved without regard to its knowledge of such information, it being agreed that each party, in entering into this Agreement, has bargained for the correctness of each representation, warranty, covenant and agreement of the other parties contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Asset Purchase Agreement (Endurance International Group Holdings, Inc.)
Limitations on Indemnification Obligations. Notwithstanding any provision to the contrary contained in this Agreement, the rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 5.2(a) are subject to the following limitations:
(a) the amount of any and all Losses will be determined net of (i) any amounts recovered or reasonably expected to be recovered by the Buyer Indemnitees pursuant to any indemnification by, or indemnification agreement with, any third party, (ii) any amounts recovered or reasonably expected to be recovered by the Buyer Indemnitees pursuant to any insurance policy, and (iii) any other cash receipts or sources of reimbursement received by the Buyer Indemnitees in respect of or as an offset against such Losses, (each source of recovery referred to in clauses (i), (ii) and (iii), a “Collateral Source”) and (iv) the amount of any Tax benefits actually realized by the Buyer Indemnitees with respect to such Losses in the form of a refund or reduction of Taxes payable in the taxable year or in the immediately following one (1) taxable year in which the relevant Losses were incurred by the Buyer Indemnitees (a “Tax Benefit”). For purposes of this Agreement, the Buyer Indemnitees shall be deemed to have Tax Benefit based on a reduction of Taxes payable only to the extent that, and at such time as, the amount of Taxes required to be paid by any Buyer Indemnitee for the applicable year is reduced below the amount of Taxes that it would have been required to pay but for deductibility of such Losses, in each case: (i) during the same taxable year or in the immediately following one (1) taxable year in which the relevant Losses were incurred; (ii) calculated so that the items related to the Buyer Indemnitees’ indemnification obligations are the last to be recognized; and (iii) as reasonably determined by the Buyer Indemnitees. The Purchaser Indemnified Parties amount of any reduction hereunder shall be adjusted to reflect any final determination with respect to the Buyer Indemnitees’ liability for Taxes, consistent with the foregoing.
(b) excluding (i) claims arising from or based on Fraud, and (ii) claims for breach of Fundamental Representations (other than Section 2.12 (Employee Plans)), the Buyer Indemnitees shall not be entitled to recover for any Losses unless and pursuant to Section 5.2(a)(i) until such time as the Losses in the aggregate for total amount which the Purchaser Indemnified Parties are entitled to be indemnified hereunderBuyer Indemnitees would recover under this Agreement (as limited by the provisions of this Section 5.4), including the indemnification but for Taxes set forth in Article 7this Section 5.4(b), exceed exceeds $250,000 354,500 (the "Purchaser Loss “Threshold"”) and then only for the excess over the Threshold;
(c) other than Losses resulting from Fraud or breach of Fundamental Representations (other than Section 2.12 (Employee Plans), at which time the Purchaser Indemnified Parties Buyer Indemnitees shall not be entitled to recover all any Loss (and such Losses in excess of Loss shall not be counted against the amount of Threshold) pursuant to pursuant to Section 5.2(a)(i) unless such individual Loss exceeds $5,000 (the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 “Mini-Basket”);
(Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersd) or actual fraud, in no event shall the Losses for which obligations of Seller to provide indemnification pursuant to Section 5.2(a)(i) Agreement exceed an aggregate amount equal to the Purchaser Indemnified Parties are Indemnity Escrow Amount, other than based on a breach of a Fundamental Representation (other than Section 2.12 (Employee Plans));
(e) the Buyer Indemnitees shall not be entitled to recover Losses hereunder resulting from breach of representations and warranties (other than based on a breach of a Fundamental Representation, except Section 2.12 (Employee Plans)) from any source other than the Indemnity Escrow Amount in the Escrow Account and the R&W Insurance Policy;
(f) if any Buyer Indemnitee has been indemnified for a Loss hereunder and at any time thereafter such Buyer Indemnitee or any other Buyer Indemnitee recovers all or a portion of such Loss from a Collateral Source or receives a Tax Benefit with respect to such Loss, the Buyer Indemnitees shall promptly refund to the Escrow Account (if the during the term of the Escrow Account) or Seller (if the term of the Escrow Account has expired and the Escrow Account has been liquidated) the amount previously received by the Buyer Indemnitees (whether received from the Escrow Account or from or on behalf of Seller) with respect to such Loss (up to the amount recovered from the Collateral Source) or the amount of the Tax Benefit;
(g) to the extent an item has been reflected as a liability or a deduction from an asset in the calculation of the Closing Net Working Capital, or has been treated as Closing Date Funded Indebtedness or a Selling Expense included in the determination of the Purchase Price, the Buyer Indemnitees shall not be indemnified hereunder exceedentitled to indemnification pursuant to this Agreement on account of said item; and
(h) Seller shall have no obligation to indemnify the Buyer Indemnitees for any Losses attributable to any Taxes (i) to the extent such Taxes have been adequately reflected as a liability in the Closing Net Working Capital, (ii) resulting from an action taken by Buyer, any Company or any of their Affiliates on the Closing Date outside the ordinary course of business that is not contemplated by this Agreement (iii) attributable to the Buyer’s breach of any covenant set forth in Section 4.1 or (iv) of Buyer, any Company or any of their Affiliates (A) attributable to any Post-Closing Tax Period or (B) with respect to any Company StockholderStraddle Period, an amount equal to $6.0 million, and in any event Losses with respect attributable to the portion of such Taxable period deemed to begin after the Closing Date determined pursuant to Section 4.1(f). Notwithstanding anything in this Agreement to the contrary, Seller shall have no obligation to indemnify the Buyer Indemnitees for any Losses arising from the matters described in clause (a) of Section 2.18 of the Disclosure Schedule (the “Excluded Tax Matters”). The Buyer Indemnitees shall use commercially reasonable efforts to make a claim for recovery of any amounts recoverable by them from any Collateral Source. The Buyer Indemnitees shall use their respective commercially reasonable efforts to mitigate any Losses solely to the extent required by Law. Notwithstanding anything to the contrary set forth herein, the limitations set forth in Section 5.4(b), Section 5.4(c), Section 5.4(d) and Section 5.4(e) shall not limit the rights of the Buyer Indemnitees to indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization)covenants, 2.2 (Subsidiaries)the Special Indemnity or Fraud; provided, 2.4 (Execution and Delivery)however, 2.6 (Capitalization) and 2.16 (Tax Matters) that the liability of this Agreement and actual fraud Seller for such matters or any other indemnifiable matters shall not exceed with respect be subject to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled cap equal to be indemnified hereunder shall be reduced by (i) the amount of net, after-Tax proceeds received by Seller. Upon request, if the Seller is a Responsible Party, Seller shall cooperate with, assist and take such reasonable actions requested by the Indemnified Party in connection with the Indemnified Party’s reasonable efforts to make a claim for recovery of any insurance proceeds which amounts recoverable by the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive Party from any third party Collateral Source, including without limitation making claims against the Sellers (as defined in that certain Securities Purchase Agreement, dated as of September 6, 2019, among PVT Holdings, Inc., the Sellers (as defined therein), the Seller Representative (as defined therein) and BPA (the “Branford Purchase Agreement”)) pursuant to the Branford Purchase Agreement and/or under the representations and warranties insurance policy written by Fidelis Underwriting Limited, Policy No. 19FULRP-7451-0087, procured in connection with the transactions contemplated by the Branford Purchase Agreement. If the Buyer Indemnitees actually recover amounts from a Collateral Source in respect to such Loss; and (iii) an amount equal to any net Tax Benefits of Losses incurred as a result of the Purchaser Indemnified Parties attributable Excluded Tax Matters, Buyer Indemnitees shall notify Seller and Seller may offset up to $600,000 of such Loss. The liability of any Company Stockholder for damages amounts actually recovered from a Collateral Source, less expenses incurred by the Buyer Indemnitees in recovering such amounts, against Seller’s future, pending or unresolved indemnification obligations under this Agreement Agreement; provided that the Buyer Indemnitees shall not be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on required to remit such Company Stockholder's Pro Rata Portion and limited recovered amounts to Seller (or deposit such amounts into the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by Escrow Account (if during the Purchaser Indemnified Parties after the taxable year of payment term of the Loss, Purchaser shall pay Escrow Account) pursuant to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitSection 5.4(f).
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Joinder Parties’ obligations pursuant to Section 10.2 are subject to the following limitations:
(i) The PTI Indemnitees shall not be entitled to recover for any Losses unless and under Section 10.2(a) until such time as the Losses in the aggregate for total amount which the Purchaser Indemnified Parties are entitled to be indemnified hereunderPTI Indemnitees would recover under Section 10.2(a), including the indemnification but for Taxes set forth in Article 7this Section 10.3(a), exceed exceeds $250,000 * (the "Purchaser Loss “Threshold"”), at which time and then the Purchaser Indemnified Parties PTI Indemnitees shall be entitled to recover all Damages back to the first dollar of Damages incurred. The limitation in the preceding sentence shall not apply to any Damages for the breach of any covenant or agreement or representation or warranty under Section 4.1 (organization and qualification), Section 4.2 (capitalization), Section 4.3 (authority) and 4.15 (Taxes) (such Losses in excess representations and warranties, collectively, the “Excluded Representations and Warranties”) or Section 4.19 (brokers) or the Diatos Obligation (and such Damages with respect to any breach of any covenant or agreement, any of the Excluded Representations and Warranties, Section 4.19 or the Diatos Obligation shall not be counted in determining whether the Threshold has been exceeded).
(ii) The aggregate amount of indemnification that the Purchaser Loss Threshold. Except for those Losses which arise out PTI Indemnitees may receive, collectively, shall be an amount equal to * payable in immediately available funds or PTI Ordinary Shares from time to time having a per share value equal to the average closing offer price of a PTI Ordinary Share as shown on the Official Daily List of the London Stock Exchange for the twenty (20) days immediately preceding the date of payment in settlement of any claim for indemnification under Section 10.2(a) (the “Joinder Parties’ Cap”). The limitation in the preceding sentence shall not apply to any Damages for Taxes the breach of any of the Excluded Representations and Warranties or the Company’s covenants or agreements hereunder (and such Damages with respect to any breach of such covenant or agreement or any of the Excluded Representations and Warranties shall be limited to an amount equal to the dollar value of all PTI Ordinary Shares delivered to the holders of Company Stock pursuant to this Agreement on the date of such delivery).
(b) PTI’s obligations pursuant to Section 10.2 are subject to the following limitations:
(i) The Joinder Party Indemnitees shall not be entitled to recover under Article 7 Section 10.2(a) until the total amount that the Joinder Party Indemnitees would recover under Section 10.2(b), but for this Section 10.3(b), exceeds the Threshold, and then the Joinder Party Indemnitees shall be entitled to recover all Damages back to the first dollar of Damages incurred. The limitation in the preceding sentence shall not apply to any Damages for the breach of any covenant or a agreement or representation or warranty under Section 5.1 (organization and qualification), Section 5.2 (authority), Section 5.3 (capitalization) (and such Damages with respect to any breach of any covenant or agreement or any of the representations and warranties contained set forth in Section 2.1 (Organization)5.1, Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), 5.2 and Section 2.16 5.3 shall not be counted in determining whether the Threshold has been exceeded).
(Tax Mattersii) or actual fraudThe aggregate amount of indemnification that the Joinder Party Indemnitees may receive, collectively, to satisfy claims under Section 10.2(b) shall be * (the “PTI Cap”). The limitation in no event the preceding sentence shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect not apply to any Damages for the failure of PTI to deliver the PTI Ordinary Shares to the holders of Company StockholderStock pursuant to this Agreement, absent the occurrence of an event giving rise to PTI’s right to terminate this Agreement pursuant to Section 9.1 (such Damages for failure to deliver the PTO Ordinary Shares to the holders of Company Stock pursuant to this Agreement shall be limited to an amount equal to $6.0 million, and in any event Losses with respect the dollar value of all PTI Ordinary Shares required to be delivered to the indemnification for Taxes under Article 7 or with respect holders of Company Stock pursuant to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder on the date such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholderdelivery would have been required). Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by * Confidential treatment requested.
(ic) In determining the amount of any Damages, the amount of such Damages shall be calculated net of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) and any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive received by any party claiming indemnification hereunder from any third party with respect to hereto. In the event that any party claiming indemnification hereunder shall collect any available insurance proceeds and any indemnities, contributions or other similar payments from third parties following its receipt of indemnification from another party pursuant hereto, such Loss; and (iii) party shall reimburse the other party or, in the event that PTI has applied any of the Holdback Shares, PTI shall redeposit any such PTI Ordinary Shares into the Holdback Shares in an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable such proceeds or other payments used to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of reduce the amount of such Tax Benefit.
(b) Each Loss for which Damages as set forth in the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms first sentence of this AgreementSection 10.3(c).
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Merger Agreement (Protherics PLC)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time Except as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes otherwise set forth in Article 7this Section 6.3, exceed there shall be no Liability of any Company Holder for indemnification under Section 6.1(a) unless the aggregate amount of Adverse Consequences thereunder exceeds $250,000 100,000 (the "Purchaser Loss “Indemnity Threshold"”), at which time the Purchaser Indemnified Parties shall Company Holders will be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses liable with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion full amount of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which Adverse Consequences, including those that comprised the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitIndemnity Threshold amount.
(b) Each Loss for which The indemnification obligations of the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder Holders under Section 6.1(a) for breaches and inaccuracies of representations and warranties other than the Company Fundamental Representations shall be reduced by (i) limited to the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such LossEscrow Fund.
(c) This The indemnification obligations of the Company Holders under Section 6.8 is 6.1(a) for Third Party Claims alleging facts that, if true, would constitute an indemnifiable claim shall be limited to the Escrow Fund.
(d) The indemnification obligations of the Company Holders under Section 7.1(a) for breaches related to Section 3.14 (Privacy) or Section 3.25 (Intellectual Property) shall be limited to recovery (A) first from the Escrow Fund and thereafter (B)(1) if the aggregate of all unresolved or unsatisfied Adverse Consequences set forth in no way intended all Claims Notices delivered to affect the obligation Representative prior to the Escrow Claim Period Expiration Date exceeds the then-existing Escrow Fund or (2) after the Escrow Claim Period Expiration Date, directly from each Indemnifying Party, according to such Company Holder’s Participation Percentage of Purchaser such Adverse Consequences, in each case only to deliver the extent such Adverse Consequences exceed amounts retained in the Escrow Fund in respect to unresolved Claims applicable to such breaches or inaccuracies, up to an aggregate amount equal to twenty-five percent (25%) the Merger Consideration (inclusive of amounts withdrawn from the Escrow Fund) paid to the Company Holders pursuant to Sections 2.1(c), (d) and (e).
(e) The indemnification obligations of the Company Holders under (i) under Section 6.1(a) for breaches related to Sections 3.1 (Organization; Good Standing), 3.2 (Power, Authority and Validity), 3.4 (Capitalization) or 3.27 (Taxes), and (ii) Section 6.1(b) through Section 6.1(g), shall be limited to recovery (A) first from the Escrow Fund and thereafter (B)(1) if the aggregate of all unresolved or unsatisfied Adverse Consequences set forth in all Claims Notices delivered to the Representative prior to the Escrow Claim Period Expiration Date exceeds the then-existing Escrow Fund or (2) after the Escrow Claim Period Expiration Date, directly from each Indemnifying Party, according to such Company Holder’s Participation Percentage of such Adverse Consequences, in each case only to the extent such Adverse Consequences exceed amounts retained in the Escrow Fund in respect to unresolved Claims applicable to such breaches or inaccuracies, up to an aggregate amount equal to the Merger Consideration (inclusive of Credit Agreement Debt being amounts withdrawn from the Escrow Fund) paid by Purchaser at Closing to the Company Holders pursuant to Sections 2.1(c), (d) and (e).
(f) Notwithstanding the foregoing, the indemnification obligations of the Company Holders in accordance connection with fraud or willful misrepresentation shall not be limited; provided, however, that no Company Holder shall be liable for any fraud or willful misrepresentation of another Company Holder if such fraud or willful misrepresentation was committed in such other Company Holder’s capacity as a Company Holder. For the avoidance of doubt, all Company Holders shall be liable for claims of fraud and willful misrepresentations of the Company and any of its representatives (made in their capacity as such, without regard to their status as a Company Holder) pursuant to the terms of this AgreementArticle VII. The Indemnity Threshold shall not apply to indemnification obligations in connection with (i) fraud or willful misrepresentation or (ii) breaches of Company Fundamental Representations.
(dg) Notwithstanding anything to the contrary contained hereinin this Agreement, for purposes of calculating the amount of any indemnifiable Adverse Consequences pursuant to Section 6.1 or Section 6.2 (but for the sake of clarity, not in determining whether or not there has been a breach), each representation, warranty, covenant and agreement made by the Indemnification Escrow Company, Buyer or Merger Sub (whether made herein or in any other document, agreement or instrument delivered in connection with this Agreement or therewith) is deemed to be made without any qualification or limitation as to materiality (including any qualification or limitation made by reference to “material” or a “Material Adverse Effect”) and, without limiting the foregoing, the words “material” and “Material Adverse Effect” and words of similar import shall be deemed deleted from any such representation, warranty, covenant or agreement for such purposes.
(h) If any fact, circumstance or event gives rise to a claim pursuant to multiple sections or provisions of this Agreement or any Schedule, agreement, certificate or other document delivered in connection with this Agreement, a Person asserting such claim shall have the right, at its sole discretion, to assert its claim pursuant to any or all such sections or provisions, and shall be entitled to each and every remedy available pursuant to each and every section or provision pursuant to which such Person elects, at its sole discretion, to assert such claim.
(i) Except as expressly set forth otherwise in this Agreement, the Working Capital Escrow Agreementparties hereto agree that, or other than for specific performance, (i) the Stockholder Representative indemnification provisions set forth in this Article VII shall be the sole and exclusive remedy of the Indemnified Parties for any and all claims against the Indemnifying Parties for Adverse Consequences with respect to this Agreement, and in the transactions contemplated hereby, and (ii) all applicable statutes of limitations or other claims periods with respect to claims hereunder and thereunder shall be shortened to the survival periods expressly set forth herein.
(j) Adverse Consequences shall be calculated net of actual recoveries received by Indemnified Parties under insurance policies or from third parties (net of any collection costs and deductibles, and excluding any recoveries from any Tax Authority). If any recoveries of the agreements contemplated hereby nature referred to in the preceding sentence are received by an Indemnified Party with respect to any Adverse Consequences after an Indemnifying Party has made an indemnification payment or thereby, a payment has been made from the maximum aggregate liability Escrow Fund to such Indemnified Party with respect thereto and receipt of any Company Stockholder such recoveries prior to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other such payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed would have reduced the amount of Common Merger Consideration actually such indemnification if received prior to such payment, then such Indemnified Party shall promptly pay the net amount of such recoveries up to the amount of the applicable indemnification payment made by such Company StockholderIndemnifying Party or paid from the Escrow Fund to the Indemnifying Party as directed in writing by the Representative.
Appears in 1 contract
Samples: Merger Agreement (RetailMeNot, Inc.)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Indemnitees shall not be entitled to recover receive amounts pursuant to Section 6.2(a) (other than for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect relating to breaches of Sections 2.1 (Organization)the Special Representations) for any individual item or series of related items based on substantially the same facts and circumstances where the Losses relating to such item or series of related items based on substantially the same facts and circumstances are less than $2,500, 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud such Losses shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of be applied against the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitBasket.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled Seller shall not have any obligation to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover indemnify Purchaser Indemnitees with respect to Losses arising under Section 6.2(a) (other than pursuant to breaches or inaccuracies in any of the Special Representations) until the aggregate amount of all Losses thereunder exceeds $25,000 (the “Basket”); provided, however, that once such Loss; and (ii) any indemnityaggregate amount of such Losses exceeds the Basket, contribution or other similar payment which Seller shall be liable for the Company Stockholder Indemnified Parties receive from any third party with respect to entire amount of such LossLosses otherwise recoverable under Section 6.2(a).
(c) This Seller shall not have any obligation to indemnify Purchaser Indemnitees with respect to Losses arising under Section 6.8 is 6.2(a) (other than pursuant to breaches or inaccuracies in no way intended any of the Special Representations) in excess of an aggregate amount equal to affect $1,000,000 (the “Cap”). Seller shall not have any obligation to indemnify Purchaser Indemnitees with respect to Losses arising under Section 6.2(a) pursuant to a breach or inaccuracy of a Special Representation or Section 6.2(b) in excess of an aggregate amount equal to $3,800,000.
(d) Purchaser shall not have any obligation to deliver the Merger Consideration and indemnify Seller Indemnitees with respect to Losses arising under Section 6.3(a) until the aggregate amount of Credit Agreement Debt being paid by all Losses thereunder exceeds the Basket; provided, however, that once such aggregate amount of such Losses exceeds the Basket, Purchaser at Closing in accordance with shall be liable for the terms entire amount of this Agreementsuch Losses otherwise recoverable under Section 6.3(a).
(de) Purchaser shall not have any obligation to indemnify Seller Indemnitees with respect to Losses arising under Section 6.3(a) in excess of the Cap.
(f) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow this Agreement, the Working Capital Escrow Agreementeach Party’s rights to indemnification and any other recovery under law or equity with respect to Losses based upon fraud, willful misconduct or the Stockholder Representative Agreementintentional misrepresentation, and shall not be limited in any way, including by any of the agreements contemplated hereby or thereby, the maximum aggregate liability terms and conditions of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderthis Agreement.
Appears in 1 contract
Samples: Asset Purchase Agreement (Alliqua BioMedical, Inc.)
Limitations on Indemnification Obligations. Notwithstanding anything in this Agreement to the contrary, (i) neither Party shall be liable to the other Party for Losses arising under Section 9.2 or 9.3, as applicable, unless the claim therefor is asserted in writing on or prior to the expiration of the applicable representations and warranties and (ii) the liability of the Sellers to the Buyer Indemnified Parties with respect to claims for indemnification pursuant to Section 9.2 is subject to the following limitations:
(a) The Purchaser Sellers shall not, in the aggregate, be liable to the Buyer Indemnified Parties shall not be entitled for Losses arising under Section 9.2 (other than with respect to recover for any Losses unless and until such time as Fundamental Representations) to the Losses in extent that the aggregate amounts otherwise indemnifiable for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses exceeds an aggregate maximum amount equal to fifteen percent (15%) of the Purchase Price actually received by the Sellers in cash or from the receipt of payments under the Buyer Notes.
(b) No Seller shall, in the aggregate, be liable to the Buyer Indemnified Parties for Losses arising under this Agreement (including Section 9.2) in excess of the amount sum of (i) the aggregate Purchase Price received by such Seller in cash at the Closing and (ii) the cash proceeds received by such Seller from payment of the Purchaser Loss ThresholdBuyer Notes.
(c) With respect to any indemnification claim for Losses hereunder, such Seller shall solely be responsible for its Pro Rata Share of such indemnification claim. Except Notwithstanding the foregoing, no Seller shall be responsible for those Losses which arise out any breach (i) of a representation and warranty made in Article III by any other Seller and (ii) of a post-Closing covenant by any other Seller.
(d) The Sellers shall not be liable to the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Buyer Indemnified Parties are entitled to be indemnified hereunder exceed, for Losses arising under Section 9.2 (other than with respect to Fundamental Representations) until and unless the aggregate amounts indemnifiable for such breaches exceeds $150,000, at which point the Indemnifying Party will be obligated to indemnify the Buyer Indemnified Party from and against all Losses relating back to the first dollar of Losses.
(e) Without limiting the effect of any Company Stockholderother limitation contained in this Article IX, for purposes of computing the amount of any Losses incurred by any Buyer Indemnified Party under this Article IX, there shall be deducted an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which proceeds, indemnification payments, contribution payments, reimbursements or other recoveries actually received (net of actual out-of-pocket costs of enforcement, deductibles and retro-premium adjustments), and any Tax benefits realizable, by Buyer or any of its Affiliates in connection with such Losses or any of the Purchaser circumstances giving rise thereto. If Buyer or any of its Affiliates becomes entitled to receive any insurance proceeds, indemnification payments, contribution payments, or reimbursements or other recoveries or Tax benefit after an indemnification payment has been made to it, Buyer or its Affiliates, as the case may be, shall promptly pay (up to the aggregate amount of indemnification payments previously made to Buyer or its Affiliates hereunder) to the Sellers, the amount of such insurance proceeds, indemnification payments, contribution payments, or reimbursements or other recoveries or Tax benefit at such time or times as and to the extent that such insurance proceeds, indemnification payments, contribution payments, or reimbursements or other recoveries or Tax benefits are actually received by Buyer or its Affiliates.
(f) If a Seller is finally determined to be liable to a Buyer Indemnified Parties recover with respect to Party for Losses arising under Section 9.2, such LossLosses shall be paid as follows: (i) fifty percent (50%) of such Losses shall be paid in cash; (ii) any indemnity, contribution or other similar payment which twenty-five percent (25%) of such Losses shall be paid through a reduction in the Purchaser Indemnified Parties receive from any third party with respect to principal amount of such LossSeller’s Buyer Note I; and (iii) twenty-five percent (25%) of such Losses shall be paid through a reduction in the principal amount of such Seller’s Buyer Note II. Provided that the Buyer shall not seek payment in a manner contrary to the immediately preceding sentence unless otherwise agreed to by such Seller, unless the cash portion of the Loss set forth in (i) above is not paid in full, in which case Buyer may seek an increase in the reduction in the principal amount of such Seller’s Buyer Note I or Buyer Note II in an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefitshortfall.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Securities Purchase Agreement (Smart for Life, Inc.)
Limitations on Indemnification Obligations. (a) The Other than as provided in this Section 8.06, neither Purchaser nor Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties Persons shall be entitled to recover all indemnification pursuant to Section 8.03(a) of this Agreement (other than for an intentional breach of any agreement or covenant contained in this Agreement) unless the aggregate amount of Damages incurred by Purchaser or such Losses Purchaser Indemnified Persons (as defined in this Agreement or the Wastewater Purchase Agreement, as applicable) under this Agreement and the Wastewater Purchase Agreement exceeds Two Hundred Fifty Thousand Dollars and No/100 ($250,000.00) in the aggregate (the "Threshold Amount"), in which case the Indemnifying Party (as defined in this Agreement or the Wastewater Purchase Agreement, as applicable) shall then be liable for Damages in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitThreshold Amount.
(b) Each Loss for which the Company Stockholder Other than as provided in this Section 8.06, neither Seller nor Seller's Indemnified Parties are Persons shall be entitled to be indemnified hereunder shall be reduced by indemnification pursuant to Section 8.04(a) of this Agreement (iother than for an intentional breach of any agreement or covenant contained in this Agreement) unless the aggregate amount of any insurance proceeds Damages incurred by Seller and Seller's Indemnified Persons (as defined in this Agreement or the Wastewater Purchase Agreement, as applicable) under this Agreement and the Wastewater Purchase Agreement exceeds the Threshold Amount, in which case the Company Stockholder Indemnified Parties recover with respect to such Loss; and Indemnifying Party (iias defined in this Agreement or the Wastewater Purchase Agreement, as applicable) any indemnity, contribution or other similar payment which shall then be liable for Damages in excess of the Company Stockholder Indemnified Parties receive from any third party with respect to such LossThreshold Amount.
(c) This Other than as provided in this Section 6.8 is in no way intended 8.06, the cumulative, combined, aggregate indemnity obligation or liability for Damages of Seller pursuant to affect this Agreement shall not exceed the obligation of Purchaser to deliver the Merger Consideration Liability Cap.
(d) The Threshold Amount and the aggregate amount Liability Cap shall not apply to Seller's obligations to indemnify (i) pursuant to 8.03(c) due to failure to pay or discharge an Excluded Liability, (ii) to the extent due to an intentional breach of Credit Agreement Debt being paid by Purchaser at Closing any agreement or covenant contained in accordance with this Agreement, (iii) if related to a Claim for breach of a representation under Section 4.01 (Power), Section 4.02 (Authorization and Validity of Agreement), Section 4.07 (Tax Matters), the terms second sentence of Section 4.08 (Title to Real Property), Section 4.12 (Employee Benefit Plans) or Section 4.20 (Title to Acquired Assets), (iii) for a Claim arising out of the intentional breach of any agreement or covenant in this Agreement, fraud or willful misconduct of Seller.
(e) The rights of Seller set forth in this Article VIII shall be the sole and exclusive remedy available to Seller for any Claim for Damages pursued under this Agreement.
(df) Notwithstanding anything The rights of Purchaser set forth in this Article VIII shall be the sole and exclusive remedy available to the contrary contained herein, in the Indemnification Escrow Purchaser for any Claim for Damages pursued under this Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any .
(g) For purposes of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed calculating the amount of Common Merger Consideration actually received Damages incurred by such Company Stockholderthe Indemnified Party arising out of or resulting from any breach of, a representation, covenant, or agreement by any Party hereto, the references to a "Material Adverse Effect" or materiality shall be disregarded.
Appears in 1 contract
Samples: Asset Purchase Agreement
Limitations on Indemnification Obligations. In addition to any other limitations contained in ARTICLE IX and ARTICLE X hereof, the obligations of Seller and Purchaser to indemnify any Purchaser Indemnified Party or Seller Indemnified Party, as the case may be, are subject to, and limited by, the following:
(a) The Purchaser Indemnified Parties Seller shall not be entitled obligated to recover for any Losses unless and until such time as the Losses in provide indemnification pursuant to Section 10.1(a)(i) only if the aggregate for which dollar amount of Losses with respect to all misrepresentations and breaches of warranty referred to in Section 10.1(a)(i) exceeds an amount equal to 1.5% of the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth Purchase Price as finally adjusted in Article 7, exceed $250,000 accordance with Section 2.4 (the "Purchaser Loss Threshold"“Deductible”), at which time and then only for the Purchaser Indemnified Parties shall be entitled to recover all such amount of Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud Deductible; provided that Seller shall not exceed with respect be obligated to a Company Stockholder such Company Stockholder's Pro Rata Portion of provide indemnification pursuant to Section 10.1(a)(i) if the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the dollar amount of any insurance proceeds which Loss resulting from a single claim or aggregated claims arising out of related facts, events or circumstances in connection with the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution breach of a representation or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, warranty is less than $15,000 and any assertion of such Loss or Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to shall not count towards the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitDeductible.
(b) Each Loss The maximum aggregate liability of Seller for which the Company Stockholder Indemnified Parties are entitled indemnification for all Losses pursuant to be indemnified hereunder Section 10.1(a)(i) shall be reduced by (i) an amount equal to 22.5% of the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover Purchase Price as finally adjusted in accordance with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such LossSection 2.4.
(c) This Section 6.8 is in no way intended Each Indemnified Party shall be obligated to affect use its reasonable best efforts to mitigate the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementany Losses for which it is entitled to seek indemnification hereunder.
(d) Notwithstanding The amount of any indemnification payments finally determined to be due to an Indemnified Party pursuant to this ARTICLE X or ARTICLE VI shall be calculated taking into account any Income Tax benefits actually recognized as a result of the Loss as to which such payment is made (net of any Income Tax detriment actually recognized in respect of the receipt of such payments) by such Indemnified Party. The Indemnified Party shall use its commercially reasonable efforts to contest any effort by a Governmental Authority to disallow any such net Income Tax benefits or to otherwise avoid such net Income Tax benefits becoming unavailable; notwithstanding the foregoing, to the extent any such net Income Tax benefit is subsequently finally determined to be disallowed or otherwise unavailable to the Indemnified Party, the Indemnified Party may recover the disallowed or unavailable amount from the Indemnifying Party.
(e) Upon making any indemnification payment, the Indemnifying Party will, to the extent of such payment, be subrogated to all rights of the Indemnified Party against any third party in respect of the Loss to which the payment relates. Each such Indemnified Party and Indemnifying Party will duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation rights.
(f) The amount of any Losses sustained by an Indemnified Party and owed by an Indemnifying Party shall be reduced by any amount to which such Indemnified Party actually receives with respect thereto under any insurance or reinsurance coverage, or from any other party alleged to be responsible therefor (taking into account any costs, expenses, and increased premiums incurred by the Indemnified Party or its Affiliates as a direct result of the pursuit or recovery of such amounts). The Indemnified Party shall use commercially reasonable efforts to collect any amounts available under such insurance or reinsurance coverage and from such other party alleged to have responsibility. If the Indemnified Party receives an amount under insurance or reinsurance coverage or from such other party with respect to Losses sustained at any time subsequent to any indemnification actually having been paid pursuant to this ARTICLE X, then such Indemnified Party shall promptly reimburse by that amount the applicable Indemnifying Party for any such indemnification payment actually made by such Indemnifying Party.
(g) Purchaser acknowledges and agrees that, notwithstanding anything to the contrary contained hereinin ARTICLE III of this Agreement, Seller makes no representation, warranty, guaranty or covenant regarding, and shall have no obligation to indemnify Purchaser Indemnified Parties with respect to any Losses attributable to, (i) any changes in the Indemnification Escrow Agreement, level of risk-based capital that may be required to be held by any Transferred Company with respect to the Working Capital Escrow Agreementliabilities and obligations arising under Insurance Contracts issued or assumed by such Transferred Company, or (ii) any change in Applicable Law, or in the Stockholder Representative Agreementinterpretation, application or administration of Applicable Law, following the Closing Date.
(h) For the avoidance of doubt, Seller shall be under no obligation to indemnify any Purchaser Indemnified Party for any Losses to the extent reflected on the Closing Statement.
(i) Purchaser shall be obligated to provide indemnification pursuant to Section 10.1(b)(i) only if the aggregate dollar amount of Losses with respect to all misrepresentations and breaches of warranty referred to in Section 10.1(b)(i) exceeds an amount equal to 1.5% of the Purchase Price as finally adjusted in accordance with Section 2.4, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed then only for the amount of Common Merger Consideration actually received by Losses in excess of the Deductible; provided that Purchaser shall not be obligated to provide indemnification pursuant to Section 10.1(b)(i) if the dollar amount of any Loss resulting from a single claim or aggregated claims arising out of related facts, events or circumstances in connection with the breach of a representation or warranty is less than $15,000 and any such Company StockholderLoss or Losses shall not count towards the Deductible.
Appears in 1 contract
Samples: Stock Purchase Agreement (American Financial Group Inc)
Limitations on Indemnification Obligations. The rights to indemnification pursuant to the provisions of Section 9.2 are subject to the following limitations:
(a) the amount of any and all Losses will be determined net of (i) any amounts recovered by the Indemnified Party under indemnification agreements or arrangements with third parties or under insurance policies (including any amounts recovered or recoverable by the Indemnified Party under the R&W Insurance) with respect to such Losses and (ii) any net Tax benefit realized with respect to such Losses in the taxable year in which such Losses arose, determined on a “with and without” basis;
(b) prior to seeking recovery from the Sellers pursuant to Section 9.2(a)(i) (or with respect to any claim that could be made thereunder), Buyer agrees to make, or cause the appropriate Buyer Indemnitee to make, a claim for the full amount of such Loss under the R&W Insurance; provided, however, that, so long as Buyer or the appropriate Buyer Indemnitee has first made such a claim under the R&W Insurance, Buyer or such Buyer Indemnitee may also make a claim for indemnification under Section 9.2(a), notwithstanding the fact that the Buyer Indemnitee’s claim under the R&W Insurance is still pending. Buyer agrees to use reasonable best efforts to recover, and to cause the appropriate Buyer Indemnitee to recover, for such claims under the R&W Insurance (including contesting any improper denial of coverage thereunder). In no event shall any Buyer Indemnitee be entitled to recover any duplicate Losses pursuant to this Article 9. If any Buyer Indemnitee shall recover any duplicate Losses pursuant to the R&W Insurance or otherwise subsequent to recovering corresponding Losses from the Sellers pursuant to this Article 9, such Buyer Indemnitee shall promptly reimburse and deliver the amount of such duplicate recovery to the Sellers. The Purchaser Indemnified Parties Buyer Indemnitees shall not be entitled to recover Losses if such Losses would have been covered under the R&W Insurance if not for a failure by a Buyer Indemnitee to comply with the first sentence of this Section 9.5(b) due to the gross negligence or willful misconduct of a Buyer Indemnitee. Buyer shall not, and, after the Closing, shall cause the Company not to, amend or modify in any manner that may adversely affect the Sellers, or cancel or otherwise consent to the termination of, the R&W Insurance;
(c) notwithstanding anything to the contrary in this Agreement, the Buyer Indemnitees shall not be entitled to indemnification under Section 9.2(a) with respect to any Loss of any kind, interest or expenses, regardless of the form of action through which any of the foregoing are sought, that are in the nature of punitive or treble damages, except to the extent such damages are awarded to a third party;
(d) other than in the event of Fraud, the Sellers shall not be liable for any Loss pursuant to clause Section 9.2(a)(i)(C) or Section 9.2(a)(i)(D) for which any Buyer Indemnitee shall be entitled to indemnification thereunder (i) unless each such Loss (or series of related Losses unless arising out of the same or related circumstances) exceeds $50,000 and (ii) until such time as the Losses in the aggregate amount of such Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties Buyer Indemnitees shall be entitled to recover all exceeds $2,000,000, whereupon the Buyer Indemnitees shall be entitled to receive from the Indemnity Escrow Funds an aggregate amount of Losses up to the Indemnity Escrow Amount. Other than in the event of Fraud, the Sellers shall not be liable for any Loss pursuant to clause Section 9.2(a)(i)(C) or Section 9.2(a)(i)(D) once the Indemnity Escrow Funds have been exhausted and Buyer shall have no direct claims against Sellers for such Losses;
(e) only AIG, and not any other Seller, shall be liable for any Loss under Section 9.2(a) relating to a Pre-Closing Tax imposed on a Group Company under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign Tax law) by reason of a Group Company having been included in a combined, consolidated, affiliated, unitary or other group for Tax purposes the common parent of which was AIG or any of its Affiliates (other than the Group Companies) (and AIG shall be liable for the full amount of such Loss notwithstanding Section 9.2(b));
(f) notwithstanding Section 9.2(b), each Seller shall be liable for Losses in excess relation to Pre-Closing Taxes imposed on any Group Company under Subchapter C of Chapter 63 of the Code (Sections 6221 et seq.), as enacted by the Budget Act, only to the extent such Pre-Closing Taxes are attributable to such Seller’s interest in the Company during the “reviewed year” (within the meaning of Section 6225(d)(1) of the Code, as enacted by the Budget Act) (for the avoidance of doubt, taking into account any applicable adjustments under Sections 6225(c) of the Code, as enacted by the Budget Act, in relation to such Seller);
(g) the indemnification obligations of the Sellers pursuant to Section 9.2(a)(iv) shall survive until the expiration of the R&W Insurance for applicable Tax matters, after which point Section 9.2(a)(iv) shall terminate and be of no further force and effect;
(h) the Sellers shall not be liable for any Loss arising from a breach of Section 3.16 (other than Section 3.16(a) or Section 3.16(h)) to the extent such Loss relates to Taxes for Tax periods (or portions thereof) beginning after the Closing Date;
(i) other than in the event of Fraud, the aggregate total amount of Losses in respect of which Buyer Indemnitees shall be entitled to recover from the Purchaser Sellers pursuant to Section 9.2(a)(i)(A), Section 9.2(a)(i)(B), Section 9.2(a)(ii), Section 9.2(a)(iii) or Section 9.2(a)(iv) shall not exceed an amount equal to the Final Purchase Price; and
(j) other than in the event of Fraud, the aggregate total amount of Losses in respect of which Seller Indemnitees shall be entitled to recover from Buyer pursuant to clause (i) of Section 9.2(c) shall not exceed an amount equal to the Final Purchase Price; provided, that Buyer shall not be liable under clause (i) of Section 9.2(c) unless each such Loss Threshold. Except for those (or series of related Losses which arise arising out of the indemnification for Taxes under Article 7 same or a breach of related circumstances) exceeds $50,000. Without limiting the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization)foregoing, and Section 2.16 notwithstanding anything herein to the contrary, other than in the event of Fraud, (Tax Mattersi) or actual fraud, in no event shall the aggregate amount of indemnity payments made by the Sellers under this Article 9 (including for Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect related to any Company Stockholder, an amount equal to $6.0 millioninaccuracy or breach of the Seller Fundamental Representations) exceed the Final Purchase Price, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) under no circumstances shall any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from Seller’s aggregate liability for any third party with respect to and all claims for any Losses under this Agreement exceed such Loss; and (iii) an amount equal to any net Tax Benefits Seller’s Percentage Allocation of the Purchaser Indemnified Parties attributable Final Purchase Price; provided that, the foregoing exception for Fraud shall only be applicable to such Loss. The AIG if, and AIG’s aggregate liability of for any Company Stockholder and all claims for damages Losses under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment exceed AIG’s Percentage Allocation of the LossFinal Purchase Price unless, Purchaser shall pay to each Company Stockholder an amount such Losses relate to, or arise out of, Fraud committed by AIG in cash equal to such stockholder's Pro Rata Portion of making the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover representations and warranties with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Lossit in Article IV hereof.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Unit Purchase Agreement (White Mountains Insurance Group LTD)
Limitations on Indemnification Obligations. The rights of the Holdings Indemnitees and the SELLER Indemnitees to indemnification pursuant to the provisions of Section 8.2 are subject to the following limitations:
(a) The Purchaser Indemnified Parties notwithstanding anything to the contrary contained in this Agreement;
(i) neither the Basket nor the General Reps Cap shall not be entitled apply to recover for (1) any Losses unless and until such time indemnification claim made by any Holdings Indemnitee with respect to any breach of any Fundamental Representation, (2) any claim of bad faith, fraud, intentional misrepresentation or willful misconduct (collectively, “Fraud Claims”) or (3) any indemnification claim pursuant to Section 8.2.
(ii) except as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes otherwise expressly set forth in Article 7this Agreement, exceed $250,000 (the "Purchaser Loss Threshold"maximum aggregate amount that the Holdings Indemnitees may recover from SELLERs with respect to any and all Losses resulting from breaches or inaccuracies of Fundamental Representations or pursuant to Section 8.2(a)(ii), provided, further, that the maximum aggregate amount that the Holdings Indemnitees may recover from a particular SELLER with respect to any and all Losses resulting from breaches or inaccuracies of Fundamental Representations or pursuant to Section 8.2(a)(ii), shall not exceed the value of the Units issued to such SELLER at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess Closing; and
(iii) for purposes of determining the amount of Losses with respect to, and for the Purchaser Loss Threshold. Except for those Losses which arise out purposes of determining the existence of, any breach of a representation and warranty contained in ARTICLE 3 or ARTICLE 4 or any Ancillary Document in connection with SELLERs’ indemnification for Taxes obligations under Article 7 or a breach this ARTICLE 8 all of the representations and warranties set forth in ARTICLE 3 or in ARTICLE 4 or in any Ancillary Document that are qualified by materiality, Company Material Adverse Effect or words of similar import or effect will be deemed to have been made without any such qualification.
(b) The amount of any and all Losses shall be determined net of any amounts recovered and actually received by the Holdings Indemnitees under insurance policies or from other collateral sources (such as contractual indemnities of any Person which are contained in Section 2.1 outside of this Agreement) with respect to such Losses (Organization)net of any costs of collection, Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization)including any co-payment or deductible, and Section 2.16 that portion of any premium increase or replacement insurance policy resulting from the assertion of such claim attributable to such recovery or Losses).
(Tax Mattersc) Notwithstanding anything herein to the contrary, the representations, warranties and covenants set forth herein, and the Holdings Indemnitees’ right to indemnification with respect thereto, shall not be affected or actual frauddeemed waived by reason of any investigation, inquiry or examination made for or on behalf of such Holdings Indemnitees, or by reason of the fact that such Holdings Indemnitee or any of its representatives knew or should have known at any time that any such representation, warranty or covenant is, was or might be inaccurate, or by reason of the acceptance by such Holdings Indemnitees of any certificate or opinion thereunder.
(d) Without limiting the limitations on indemnification rights and obligations elsewhere in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceedthis ARTICLE 8, with respect to any Company Stockholderclaim for indemnification that is pending or unresolved at the time any payment is due from Holdings under this Agreement, Holdings shall have the right, at its election and in addition to other rights and remedies (whether under this Agreement or applicable Law), to (i) subject to the terms and conditions of this Agreement, seek indemnification from SELLERs with respect to such claims, (ii) to redeem any SELLER Units then held by the applicable SELLERs having an aggregate value (based on the value given to the Units at Closing) equal to the aggregate amount of the applicable claim for indemnification or (iii) withhold from any payment owing to SELLERs under this Agreement in an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover claim (provided it has been or is then asserted in good faith and in writing against SELLERs in accordance with respect to the provisions hereof) until such Loss; (ii) any indemnitymatters are resolved by mutual agreement or by a final, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholdernon-appealable judgment. If it is finally determined by mutual agreement or by a Tax Benefit attributable final, non- appealable judgment that SELLERs are required to a Loss is realized by indemnify the Purchaser Indemnified Parties after the taxable year of payment of the LossHoldings Indemnitees pursuant to this ARTICLE 8, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.claims may be
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) set-off against the amount withheld payments and the remainder of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect such withheld payments, if any, shall be delivered pursuant to such Loss; and this Agreement or
(ii) any indemnity, contribution or other similar payment which paid by the Company Stockholder Indemnified Parties receive from any third party with respect redemption of SELLER Units then held by the SELLERs having an aggregate value (based on the value given to such Loss.
(cthe Units at Closing) This Section 6.8 is in no way intended equal to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being any such indemnification claim. Nothing in this Section 8.4(d) shall be construed as limiting the liability of SELLERs under this ARTICLE 8, nor shall amounts set-off against or withheld from any payment hereunder or paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything pursuant to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability redemption of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement Units be considered as liquidated damages for any breach under this Agreement or any other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderagreement contemplated hereby.
Appears in 1 contract
Samples: Contribution and Sale Agreement (Verus International, Inc.)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein:
(i) (A) With respect to the indemnification obligations of the Company Equityholders pursuant to Section 6.1(a)(i)1), the Company Equityholders shall not be obligated to indemnify the Parent Indemnified Parties under Section 6.1(a)(i)1) unless the aggregate of all Losses for which the Company Equityholders would, but for this clause (i)(A), be liable under Section 6.1(a)(i)1) exceeds on a cumulative basis $550,000 (the “Deductible”), at which point, subject to any other applicable limitations contained in this Section 6.1(e), the Parent Indemnified Parties shall be entitled to all indemnification amounts under Section 6.1(a)(i)1) from the Company Equityholders in excess of the Deductible up to an amount equal to $1,100,000 (the “Retention”); and (B) with respect to the indemnification obligations of the Company Equityholders pursuant to Section 6.1(a), the Company Equityholders shall not be obligated to indemnify Parent Indemnified Parties under Section 6.1(a) for any Losses for which the Company Equityholders would, but for this clause (B), be obligated to indemnify the Parent Indemnified Parties under Section 6.1(a) in excess of an amount equal to the Closing Payment plus the Earnout Amount that is actually paid pursuant to this Agreement (or would be paid but for an offset against such Earnout Amount in accordance with this Agreement); provided, however, that the limitations in Section 6.1(e)(i)(A) shall not apply (x) to any indemnification obligations arising from the Fundamental Representations, or (y) in the Indemnification Escrow Agreementcase of Fraud with respect to this Agreement or the transactions contemplated hereby. The amount equal to the Retention minus the Deductible is defined herein as the “Stockholder Retention Amount”.
(ii) With respect to the indemnification obligations of Parent and Merger Sub pursuant to Section 6.1(b)(i), Parent and Merger Sub shall not be obligated to indemnify the Working Capital Escrow AgreementStockholder Indemnified Parties under Section 6.1(b)(i) unless the aggregate of all Losses for which Parent and Merger Sub would, but for this clause (ii), be liable under this Agreement exceeds on a cumulative basis the Deductible, at which point the Stockholder Indemnified Parties shall be entitled to all indemnification amounts under Section 6.1(b)(i) in excess of the Deductible, provided, however, that the limitations in this Section 6.1(e)(ii) shall not apply (A) to any indemnification obligations arising from the Fundamental Representations, or (B) in the case of Fraud with respect to this Agreement or the transactions contemplated hereby.
(iii) With respect to the indemnification obligations of Parent and Merger Sub pursuant to Section 6.1(b), Parent and Merger Sub shall not be obligated to indemnify the Stockholder Indemnified Parties under Section 6.1(b) for any Losses for which Parent or Merger Sub would, but for this clause (iii), be obligated to indemnify the Stockholder Indemnified Parties under Section 6.1(b) in excess of an amount equal to the Closing Payment plus the Earnout Amount; provided, however, that the limitations in this clause (iv) shall not apply (A) to any indemnification obligations arising from the representations and warranties set forth in Section 3.2 or Section 3.7, or (B) in the case of Fraud with respect to this Agreement or the transactions contemplated hereby.
(iv) The Company or the Stockholders’ Representative Agreement, and in shall not be entitled to contribution or any other payments from the Company or any of its subsidiaries for any Losses for which the agreements contemplated hereby Company or thereby, the maximum aggregate liability Stockholders’ Representative (on behalf of the Company Equityholders) is obligated to make any Company Stockholder payment to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderParent Indemnified Party pursuant to this Agreement (including ARTICLE VI).
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Section 8.5.1 Except in the case of fraud or willful misrepresentation in connection with this Agreement and the transactions contemplated hereby, from and after the Effective Time, the Company Indemnifying Parties shall not be entitled obligated to recover for indemnify any Losses Buyer Indemnified Party pursuant to clause (i)(A) of Section 8.2.1 unless and until such time as the Losses in the aggregate for which amount of all Losses paid, suffered, incurred or sustained by the Purchaser Buyer Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed under this Agreement exceeds $250,000 750,000 (the "Purchaser Loss Threshold"“Threshold Amount”), at which time whereupon the Purchaser Buyer Indemnified Parties shall be entitled to recover pursuant to such clause (i)(A) the amount of all such Losses in excess of $375,000; provided, however, that the Threshold Amount limitation set forth in this Section 8.5.1 shall not apply to Losses arising out of breaches of the representations and warranties of the Company set forth in Section 3.1, Section 3.2, Section 3.4, Section 3.7, Section 3.10 and Section 3.16, and any Losses arising out of any breaches of such representations and warranties shall not be taken into account for purposes of determining whether the Buyer Indemnified Parties have incurred Losses in excess of the Threshold Amount.
Section 8.5.2 From and after the Effective Time, the Company Indemnifying Parties shall not be obligated to indemnify any Buyer Indemnified Party pursuant to clause (i)(B) or clause (iv)(B) of Section 8.2.1 unless and until the aggregate amount of all Losses paid, suffered, incurred or sustained by the Buyer Indemnified Parties under such clauses of this Agreement exceeds $2,000,000 (the “Deductible Amount”), whereupon the Buyer Indemnified Parties shall be entitled to recover pursuant to such clauses (i)(B) and (iv)(B) only the amount in excess of the Purchaser Loss Threshold. Deductible Amount.
Section 8.5.3 Except for those Losses which arise in the case of fraud or willful misrepresentation in connection with this Agreement and the transactions contemplated hereby, or in the case of any claim arising out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained set forth in Section 2.1 3.2, from and after the Effective Time, the Company Indemnifying Parties shall not be obligated to indemnify the Buyer Indemnified Parties pursuant to clauses (Organization), i) – (v) of Section 2.2 8.2.1 (Subsidiaries), but specifically excluding clause (vi) of Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization)8.2.1) for any amounts in excess of the amounts held in the Escrow Account at the time any such indemnification obligation is paid to the Buyer Indemnified Parties, and Section 2.16 (Tax Matters) or actual fraud, the funds held in no event the Escrow Account shall be the Losses for which the Purchaser Buyer Indemnified Parties are entitled sole recourse and remedy for any indemnification claims arising hereunder.
Section 8.5.4 Except in the case of fraud or willful misrepresentation in connection with this Agreement and the transactions contemplated hereby, from and after the Effective Time, the Company Indemnifying Parties shall not be obligated to be indemnified hereunder exceedindemnify the Buyer Indemnified Parties pursuant to clause (i) – (v) of Section 8.2.1 (but specifically excluding clause (vi) of Section 8.2.1) for any indemnification claim that is made after the Expiration Date; provided, however, that such obligations shall not terminate with respect to any Company Stockholderitem as to which a Buyer Indemnified Party shall have, an amount equal before the Expiration Date, previously made a bona fide claim by delivering a notice of such indemnification claim pursuant to $6.0 millionthis Article 8.
Section 8.5.5 Except in the case of fraud or willful misrepresentation in connection with this Agreement and the transactions contemplated hereby, from and in any event Losses with respect to after the Effective Time, the indemnification provisions set forth in this Article 8 shall be the sole and exclusive recourse and remedy of the Buyer Indemnified Parties and the Company Indemnified Parties for Taxes under Article 7 any breach or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) violation of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion any claims or Losses arising out of the Common transactions contemplated hereby, and Parent, Buyer, Merger Consideration actually received by such Sub and the Surviving Corporation (on behalf of all Buyer Indemnified Parties), on the one hand, and the Company Stockholder. Each Loss for which (on behalf of all Company Indemnified Parties), on the Purchaser Indemnified other hand, hereby irrevocably waive any and all other remedies they may have against the Company Indemnifying Parties are entitled to be indemnified hereunder shall be reduced by (i) or the amount Buyer Indemnifying Parties, as the case may be, from and after the Effective Time, in respect of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to and all such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages Losses arising under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements transactions contemplated hereby or and thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Merger Agreement (Check Point Software Technologies LTD)
Limitations on Indemnification Obligations. The indemnification provided for in Section 10.2 hereof shall be subject to the following limitations:
(a) The Purchaser Indemnified Parties Seller shall not be entitled liable to recover the Buyer Indemnitees for any Losses unless indemnification under Section 10.2(a)(i) and 10.2(a)(ii) hereof until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the amount of all Damages in respect of indemnification for Taxes set forth in Article 7, exceed under Section 10.2(a)(i) and 10.2(a)(ii) exceeds US $250,000 500,000 (the "Purchaser Loss Threshold"“Deductible”), at in which time event the Purchaser Indemnified Parties Seller shall only be entitled required to recover all such Losses pay or be liable for Damages in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitDeductible.
(b) Each Loss The aggregate amount of all Damages for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder Seller shall be reduced by (iliable the Buyer Indemnitees pursuant to Section 10.2(a) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Losshereof shall not exceed US $5,000,000.
(c) This Section 6.8 is Notwithstanding the foregoing, the limitations contained in no way intended Sections 10.3(a) and 10.3(b) hereof will not limit the Seller’s obligations to affect indemnify the obligation Buyer Indemnitees in respect of Purchaser any Damages that any Buyer Indemnitee may suffer, sustain, or become subject to, as a result of fraud or intentional misrepresentation or with respect to deliver any and all breaches of the Merger Consideration and Fundamental Representations; provided, however, that the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance all Damages for which the Seller shall be liable to the Buyer Indemnitees under this Section 10.3(c) as result of fraud or intentional misrepresentation or with respect to any and all breaches of the terms of this AgreementFundamental Representations shall not exceed the Purchase Price.
(d) Notwithstanding anything Payments by the Seller pursuant to the contrary contained herein, Section 10.2(a) in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability respect of any Company Stockholder Damages shall be limited to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually any liability or damage that remains after deducting therefrom any insurance proceeds received by the Buyer or the Target Company in respect of any such Company Stockholderclaim (net of deductibles or other Damages incurred by such Buyer Indemnitee as a result of such claim, all direct collection expenses and any increased premium costs).
(e) In calculating the amount of Damages related to a breach of or inaccuracy in a representation, warranty, covenant or agreement hereunder (and for purposes of determining whether a breach or inaccuracy has occurred), the Seller shall have no liability for any Damages under this Agreement to the extent such Damages were taken into account as a liability or a reduction in the value of assets in determining the Final Net Working Capital Amount.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 8.2(a) are subject to the following limitations:
(a) The Purchaser Indemnified Parties the amount of any and all Losses of Buyer Indemnitees will be determined net of any amounts actually recovered by the Buyer Indemnitees under insurance policies with respect to such Losses; provided that if, following the payment of any indemnification amounts pursuant to Section 8.2(a), Parent, Surviving Corporation or any of their respective Affiliates recover any amounts under insurance policies with respect to such Losses, then the applicable Buyer Indemnitees shall reimburse the Escrow Account the amount of such insurance recoveries to the extent such recoveries were previously paid out of the Escrow Fund;
(b) the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.2(a) unless such Loss equals or exceeds $15,000; provided that (i) if a transaction or occurrence involving the same parties produces or results in (A) a number of separate Losses unless and until of a substantially similar nature, or (B) a succession of substantially similar Losses over a number of accounting periods, or (ii) a transaction or occurrence involving multiple parties produces or results in Losses by various parties of a substantially similar nature, then such time as the separate Losses in the aggregate for which the Purchaser Indemnified Parties are entitled will be deemed to be indemnified hereunder, including aggregated for purposes of satisfying the indemnification for Taxes $15,000 threshold set forth in Article 7, exceed $250,000 this Section 8.4(b);
(c) the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall Buyer Indemnitees will not be entitled to recover all such Losses pursuant to Section 8.2(a)(i) until the total amount which the Buyer Indemnitees would recover under Section 8.2(a)(i) (as limited by the provisions of Sections 8.4(a) and 8.4(b)), but for this Section 8.4(c), exceeds the Threshold Amount, and then only for the excess over the Threshold Amount; provided that the limitations set forth in excess this Section 8.4(c) shall not apply to Losses relating to breaches of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization)3.5 , 3.10, 3.23, or Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss3.24; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.and
(d) Notwithstanding anything at any time the Buyer Indemnitees (x) will be entitled to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed recover no more than the amount of Common Merger Consideration actually received by such Company Stockholdercash then in the Escrow Account and (y) pursuant to this Agreement, will not be entitled to recover Losses from any source other than the Escrow Account. Notwithstanding anything contained herein to the contrary, absent fraud, after the Closing, on the date that the amount of cash in the Escrow Account is reduced to zero, the Buyer Indemnitees shall have no further rights to indemnification under this Article VIII.
Appears in 1 contract
Samples: Merger Agreement (Nautilus, Inc.)
Limitations on Indemnification Obligations. Except in the case of fraud, the rights of the Buyer Indemnitees and the Seller Indemnitees to indemnification pursuant to the provisions of Section 9.2 are subject to the following limitations:
(a) The Purchaser Indemnified Parties the Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(a)(i) unless and until the total amount of Losses which the Buyer Indemnitees would recover under Section 9.2(a)(i) (except with respect to any breach of (i) any of the representations and warranties of the Company contained in Section 3.11 (Employee Plans) and Section 3.16 (Tax Matters) or (ii) any breach of a Specified Representation), but for this Section 9.4(a), exceeds $8,500,000 (the “Deductible”), in which case, following the incurrence by the Buyer Indemnitees of Losses in excess of the Deductible, the Buyer Indemnitees shall be entitled to recover only the Losses incurred by them in excess of $4,250,000;
(b) the Buyer Indemnitees shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled particular Loss (including any series of related Losses) pursuant to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 Section 9.2(a)(i) (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled except with respect to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a any breach of (i) any Specified Representation or (ii) the representations and warranties of the Company contained in Section 2.1 3.4 (OrganizationFinancial Statements), Section 2.2 3.8 (SubsidiariesAbsence of Changes and Undisclosed Liabilities), Section 2.4 3.11 (Execution Employee Plans) and DeliverySection 3.16 (Tax Matters)) unless such Loss (including any series of similar or related Losses) equals or exceeds $25,000; provided, that, for purposes of determining the thresholds set forth in the immediately preceding two paragraphs, any reference in the representations and warranties of the Company and Seller contained in ARTICLE III and ARTICLE IV (other than Section 3.4 (Financial Statements), Section 2.6 3.8 (Capitalization), Absence of Changes and Undisclosed Liabilities) and Section 2.16 3.18(b) (Tax Personal Property)) to materiality, material adverse effect, Company Material Adverse Effect or similar qualifications shall be disregarded but, for the avoidance of doubt, knowledge and dollar threshold qualifications shall not be disregarded);
(c) without limiting the last paragraph of this Section 9.4, the maximum liability of Seller with respect to Losses indemnifiable (i) pursuant to Section 9.2(a) (except with respect to (x) any breach of the Specified Representations and Section 3.20 (Regulatory Matters) or actual fraud(y) Section 9.2(a)(iii), in no event shall the (iv) or (v)), together with any Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, indemnifiable with respect to any breach of the Specified Representations or any representation or warranty of the Company Stockholdercontained in Section 3.20 (Regulatory Matters), shall be equal to $42,500,000 in the aggregate; (ii) pursuant to Section 9.2(a) with respect to any breach of any representation or warranty of the Company contained in Section 3.20 (Regulatory Matters), together with any Losses indemnifiable pursuant to Section 9.2(a) (except with respect to Section 9.2(a)(iii), (iv) or (v)) shall be equal to $85,000,000 in the aggregate, (iii) pursuant to Section 9.2(a) with respect to (x) willful misconduct constituting an intentional and knowing breach of Seller’s covenants hereunder and (y) Section 9.2(a)(iii), together with any Losses indemnifiable pursuant to Section 9.2(a), shall not exceed $125,000,000 in the aggregate, or (iv) pursuant to Section 9.2(a) with respect to (x) any breach of any Specified Representation and (y) Section 9.2(a)(iv) or (v), together with any Losses indemnifiable pursuant to Section 9.2(a) shall not exceed an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 Purchase Price;
(Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (id) the amount of any and all Losses shall be determined net of any amounts recovered by the Buyer Indemnitees under insurance proceeds policies or from other third party collateral sources (such as contractual indemnities of any Person which the Purchaser Indemnified Parties recover are contained outside of this Agreement) with respect to such LossLosses;
(e) the Buyer Indemnitees shall not be entitled to indemnification pursuant to Section 9.2(a) for any Loss to the extent that such Loss was taken into account in the determination of the Final Purchase Price pursuant to Section 2.4; and
(iif) any indemnity, contribution no Buyer Indemnitee or other similar payment which the Purchaser Indemnified Parties receive from any third party Seller Indemnitee shall be entitled to indemnification pursuant to this ARTICLE IX with respect to, and solely to the extent that, any Loss would have been mitigated had such Buyer Indemnitee or Seller Indemnitee, as applicable, had used commercially reasonable efforts to mitigate all Losses (solely to the extent such efforts are required by Law) after becoming aware of any event which could reasonably be expected to give rise to such Loss; , including seeking indemnification pursuant to the Agreement and (iii) an amount equal to any net Tax Benefits Plan of Merger, dated June 20, 2008, by and among Seller, Bondi Merger Sub, Inc., BGI and T.I. GPO, Inc. and the Purchaser Indemnified Parties attributable to such Loss. The liability Escrow Agreement, dated as of August 15, 2008, by and among BGI, the Company, T.I. GPO, Inc. and Xxxxx Fargo Bank, N.A. Except in the case of fraud, the sole recourse of any Company Stockholder Buyer Indemnitee for damages under any Losses that are indemnifiable or recoverable hereunder from Seller pursuant to this Agreement ARTICLE IX shall be several and not jointan offset against the Deferred Payment Amount and, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to if applicable, the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by Seller Note, in which event the Purchaser Indemnified Parties after Deferred Payment Amount and, if applicable, the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder Seller Note shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Lossamounts so offset; and (ii) any indemnityprovided, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained hereinhowever, that in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in event any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder claim for Losses pursuant to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.Section
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits rights of the Purchaser Indemnified Parties attributable and Seller Indemnified Parties to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited indemnification pursuant to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable provisions of this Article VI are subject to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.following limitations:
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(da) Notwithstanding anything to the contrary contained hereinin this Article VI: (i) except with respect to Losses incurred by a Purchaser Indemnified Party as a result of a breach of a Core Representation, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in no event shall Seller be required to provide indemnification to any of the agreements contemplated hereby or therebyPurchaser Indemnified Parties with respect to any claim for indemnification made pursuant to Section 6.2(a)(i), unless and until the maximum Losses incurred by the Purchaser Indemnified Parties aggregate liability of any Company Stockholder at least [***] (the “Indemnification Threshold”), after which point Seller shall be required to provide indemnification with respect to indemnifiable Losses with respect to claims for indemnification made pursuant to Section 6.2(a)(i), including the Indemnification Threshold; and (ii) in no event shall Seller be required to provide indemnification to the Purchaser Indemnified Parties for indemnifiable Losses with respect to any claim for indemnification made pursuant to Section 6.2(a)(i) in an aggregate amount in excess of [***] (the “Indemnification Cap”); provided, however, that the limitations set forth in this Section 6.3(a) shall not apply to any Excluded Claim.
(b) Notwithstanding anything to the contrary in this Article VI: (i) except with respect to Losses incurred by a Seller Indemnified Party as a result of a breach of a Core Representation, in no event shall Purchaser be required to provide indemnification to any of Seller Indemnified Parties with respect to any claim for indemnification made pursuant to Section 6.2(b)(i), unless and Merger Subuntil the Losses incurred by Seller Indemnified Parties aggregate at the Indemnification Threshold, whether by reason after which point Purchaser shall be required to provide indemnification with respect to indemnifiable Losses with respect to claims for indemnification made pursuant to Section 6.2(b)(i) including the Indemnification Threshold; and (ii) in no event shall Purchaser be required to provide indemnification to Seller Indemnified Parties for indemnifiable Losses arising from claims for indemnification made pursuant to Section 6.2(b)(i) in an aggregate amount in excess of indemnificationthe Indemnification Cap; provided, reimbursement or other payment obligation of however, that the limitations set forth in this Section 6.3(b) shall not apply to any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderExcluded Claim.
Appears in 1 contract
Limitations on Indemnification Obligations. a. Seller shall not be responsible for any Losses claimed by a Buyer Indemnitee under Section 7.2(a)(i), which result directly from the continuation by Buyer or an Acquired Company after the Effective Time of any practice or procedure engaged in by Seller or an Acquired Company prior to the Effective Time; provided, however, the foregoing shall not be construed to limit Seller’s obligation to indemnify a Buyer Indemnitee for Losses attributable to such practice or procedure prior to the Effective Time.
b. The rights of Buyer Indemnitees and Seller Indemnities to indemnification pursuant to the provisions of Section 7.2(a) and 7.2(b) are subject to the limitations set forth in this Article 7, including the following:
(ai) The Purchaser amount of Losses in respect of a matter will be determined net of any (1) amount on the Final Closing Statement relating to such matter; and (2) amounts actually recovered by Indemnitees under indemnification agreements or arrangements with third parties or under insurance policies with respect to such Losses (and no right of subrogation shall accrue to any such third party indemnitor or insurer hereunder) and (C) an amount equal to the Tax savings or benefits actually realized by the Buyer Indemnitees that is attributable to any deduction, loss, credit or other Tax benefit resulting from or arising out of such Losses. An Indemnified Parties Party shall use commercially reasonable efforts to collect any applicable insurance proceeds and pursue any applicable indemnification claims against third parties (including (1) an assignment to the Responsible Party of its right to pursue claims thereto and (2) providing the Responsible Party with reasonable assistance in pursuing any such assigned claim).
(ii) Buyer Indemnitees shall not be entitled to recover for any Losses Loss pursuant to Section 7.2(a)(i) unless and until such time as the Losses in the aggregate for amount of all Losses which the Purchaser Indemnified Parties are Buyer Indemnitees would have been entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed recover under Section 7.2(a)(i) exceeds Two Hundred Twenty-Five Thousand Dollars ($250,000 225,000) (the "Purchaser Loss Threshold"), at which time “Basket”) and then only for such Losses that exceed the Purchaser Indemnified Parties Basket.
(iii) In no event shall the Buyer Indemnitees be entitled to recover all such Losses more than Six Million Eight Hundred Fifty Thousand Dollars ($6,850,000) in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the connection with indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization7.2(a)(i), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses except with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitFundamental Representations.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) c. Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in upon any of the agreements contemplated hereby or thereby, the maximum aggregate liability Indemnified Party’s becoming aware of any Company Stockholder claim as to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received which indemnification may be sought by such Company StockholderIndemnified Party pursuant to this Article 7, such Indemnified Party shall utilize all reasonable efforts to mitigate such Losses.
Appears in 1 contract
Samples: Purchase Agreement (Hardinge Inc)
Limitations on Indemnification Obligations. The rights of an Indemnified Party to indemnification pursuant to the provisions of Section 8.1 are subject to the following limitations:
(a) The Purchaser Stockholder Indemnifying Parties shall have no liability under Section 8.1(a)(i)(A) for Damages resulting from (i) any individual claim unless the Damages from such individual claim exceed [****] dollars ($[****]) (the “Threshold”), and (ii) unless the cumulative amount of Damages for which the Stockholder Indemnifying Parties would, but for this provision, be liable to the Buyer Indemnified Party exceeds [****] Dollars ($[****]) (the “Basket”), in which case, such Buyer Indemnified Party shall be entitled to indemnification only for Damages in excess of the Basket. For the avoidance of doubt, Stockholder Indemnifying Parties shall not have any liability under Section 8.1(a)(i)(A) unless and until the amount of an individual claim for Damages equals or exceeds the Threshold. Once a claim exceeds the Threshold, then, to the extent that cumulative Damages exceed the Basket, the Buyer Indemnified Parties would be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses full amount of Damages in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitBasket.
(b) Each Loss The Stockholder Indemnifying Parties shall not in the aggregate be liable for which any Damages in excess of [****] Dollars ($[****]) (the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover “Cap”); provided, however, with respect to such Loss; and (ii) Damages arising out of the Surviving Claims, the Stockholder Indemnifying Parties shall not in the aggregate be liable for any indemnity, contribution or other similar payment which Damages in excess of the Company Stockholder Indemnified Parties receive from any third party with respect actual Purchase Price paid to such LossHoldings under this Agreement.
(c) This Section 6.8 is The Stockholder Indemnifying Parties shall not be liable for any Damages to the extent that such Damages have been reserved for on the Closing Balance Sheet and taken into account in no way intended calculating the Closing Net Asset Value amount or have been actually recovered by the Buyer Indemnified Party from another Person including, without limitation, as a result of the Buyer Indemnified Party receiving compensation for such Damages pursuant to affect any policy of insurance maintained by the obligation Buyer Indemnified Party, the Company or a tail policy purchased by the Stockholder Indemnifying Parties. The Buyer Indemnified Party shall use commercially reasonable efforts to pursue insurance coverage for Damages so long as such action does not result in a material premium increase for its insurance or negatively change the insurability of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing Buyer’s activities (whether in accordance with the terms of this Agreementcoverable risks or otherwise).
(d) Notwithstanding anything Each Indemnified Party hereunder shall take, and cause its Affiliates to the contrary contained hereintake, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreementcommercially reasonable steps to mitigate and limit any Damages upon becoming aware of any event or circumstance that would be reasonably expected to, or the Stockholder Representative Agreementdoes, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholdergive rise thereto.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Rollins Inc)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Sellers and Stockholders shall not be entitled liable to recover indemnify the Buyer Indemnitees for any Losses unless breaches of representations and warranties pursuant to Sections 12.2(a)(i) or 12.2(b)(i) (except for claims with respect to Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.6(e), 3.15, 3.17, 3.34, 3.36, 4.1 and 4.2 and the closing certificates in Section 8.1 insofar as they relate to such representations and warranties (the representation and warranties contained in such sections and certificates being the “Seller Excluded Representations”)) until such time as the Losses in the aggregate Damages incurred by the Buyer Indemnitees for which the Purchaser Indemnified Parties are entitled to indemnification may be indemnified hereunder, including the indemnification sought but for Taxes set forth in Article 7, exceed this sentence exceeds $250,000 350,000 (the "Purchaser Loss Threshold"“Basket Amount”), at which time point the Purchaser Indemnified Parties Buyer Indemnitees shall only be entitled to recover all such Losses in excess of seek indemnification for the amount of by which such Damages exceed the Purchaser Loss ThresholdBasket Amount. Except The Seller Indemnitees may not make any claim for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach breaches of representations and warranties pursuant to Section 12.3(i) (except for claims with respect to Sections 5.1 and 5.2, and the closing certificates in Section 9.1 insofar as they relate to such representations and warranties (the representations and warranties contained in Section 2.1 (Organizationsuch sections and certificates being the “Buyer Excluded Representations”), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall until the Losses aggregate Damages incurred by the Seller Indemnitees for which indemnification may be sought but for this sentence exceeds the Purchaser Indemnified Parties are Basket Amount, at which point the Seller Indemnitees shall only be entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the seek indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds by which such Damages exceed the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitBasket Amount.
(b) Each Loss The aggregate indemnification obligation of the Sellers and the Stockholders for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) breaches of representations and warranties (other than the Seller Excluded Representations) pursuant to Sections 12.2(a)(i) and 12.2(b)(i) and for breaches of the covenant in Section 6.2(b), (c) and (h) shall not exceed $12,225,000 (the “Cap Amount”) and (ii) breaches of the Seller Excluded Representations shall not exceed (together with the amount of any insurance proceeds which indemnification obligation arising under clause (i) of this Section 12.4(b)) the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which Purchase Price in the Company Stockholder Indemnified Parties receive from any third party with respect to such Lossaggregate.
(c) This The aggregate indemnification obligations of Buyer for breaches of representations and warranties pursuant to Section 6.8 is in no way intended 12.3(i) shall not exceed the Cap Amount; provided that this limitation shall not apply to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any breaches of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderBuyer Excluded Representations.
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Limitations on Indemnification Obligations. The rights of the Parent Indemnified Parties to indemnification pursuant to the provisions of Section 9.02 are subject to the following limitations:
(a) The Purchaser Parent Indemnified Parties shall not be entitled to recover for any Losses unless and pursuant to Section 9.02(a)(i) or the last sentence of Section 7.03(b) until such time as the Losses in the aggregate for total amount which the Purchaser Parent Indemnified Parties are entitled to be indemnified hereunderwould recover under Section 9.02(a)(i) and the last sentence of Section 7.03(b), including the indemnification but for Taxes set forth in Article 7this Section 9.04(a), exceed exceeds One Million Dollars ($250,000 1,000,000) (the "Purchaser Loss ThresholdTipping Amount"), at which time whereupon the Purchaser Parent Indemnified Parties shall be entitled to recover indemnification for all such Losses from the first dollar; provided, however, that the Tipping Amount shall not apply to Losses in excess respect of claims for breach of representations and warranties related to Company Fundamental Representations and any amounts recovered for Losses by Parent Indemnified Parties pursuant to breaches of Company Fundamental Representations shall not apply against the Tipping Amount.
(b) Individual Losses of less than Ten Thousand Dollars ($10,000) shall not be recoverable by any Indemnified Party under this Article IX.
(c) Notwithstanding anything contained herein to the contrary, nothing in this Section 9.04 shall limit any Person's rights to recovery in respect of fraud or willful misconduct.
(d) For the purposes of this Article IX and Section 7.03(b) only, solely when determining the amount of the Purchaser Loss Threshold. Except for those Losses which arise out suffered by an Indemnified Party as a result of the indemnification for Taxes under Article 7 any inaccuracy or a breach of the representations and warranties contained in Section 2.1 this Agreement, the amount of such Losses shall be determined (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersbut not the determination of the inaccuracy or breach) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect without reference to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion terms "knowledge of the Common Merger Consideration actually received by Company," "knowledge of the Parent," "material," "Material Adverse Effect" and other similar qualifications as to materiality contained in or otherwise applicable to such Company Stockholder. Each Loss for which the Purchaser representations and warranties.
(e) In calculating amounts of Losses payable to an Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) Party hereunder, the amount of any indemnified Losses shall be determined net of amounts actually recovered under any insurance proceeds which the Purchaser Indemnified Parties recover policy (less costs incurred to obtain such recoveries) with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitLosses.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
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Limitations on Indemnification Obligations. The rights of the Parent Indemnitees to indemnification pursuant to the provisions of Section 8.02(a) and of the Seller Indemnitees to indemnification pursuant to the provisions of Section 8.02(b) are subject to the following limitations:
(a) The Purchaser the amount of any and all Losses for which an Indemnified Parties Party may receive indemnification under Section 8.02 shall be determined net of any amounts recovered by the Indemnified Party, under insurance policies or other sources (other than Tax benefits, which shall be governed by Section 8.04(b)) with respect to such Losses;
(b) the amount of any and all Losses for which an Indemnified Party may receive indemnification under Section 8.02 shall be decreased by any Tax benefit actually realized by the Indemnified Party as a result of the Loss giving rise to the indemnification payment and which results in an actual reduction of cash Taxes paid by the Indemnified Party in the Taxable year of the Loss giving rise to the obligation or the immediate succeeding Tax year (the “Tax Benefit Netting Period”) (determined for each of such taxable years on a “with and without basis” by comparing the Indemnified Parties’ liability for Taxes in such year with and without taking into account such Loss); provided, however, that if (i) such Tax benefit is recognized after an indemnification payment is made (but within the Tax Benefit Netting Period) the relevant Indemnified Party will pay within 20 days of so realizing such Tax benefit to the relevant Responsible Party an amount equal to such reduction in cash Taxes paid (provided that if the Indemnified Party is a Seller Indemnitee, the amount of such payment will be made solely from, and shall be limited to, the Indemnity Escrow Account, by releasing to Parent a number of Parent shares equal to the dollar amount of such payment divided by the Per Share Parent Share Value as of the Business Day prior to the date of such payment), and (ii) if any Tax cost resulting from a correlative adjustment in respect of an amount that previously gave rise to a payment under clause (i) of this Section 8.04(b) is incurred by an Indemnified Party after the clause (i) payment is made (but within the Tax Benefit Netting Period), the relevant Responsible Party will pay within 20 days of the Indemnified Party realizing such Tax cost to the relevant Indemnified Party an amount equal to such cost (not to exceed the corresponding clause (i) payment; and provided that if the Responsible Party is a Stakeholder, the amount of such payment will be made solely from, and shall be limited to, the Indemnity Escrow Account, by releasing to Parent a number of Parent shares equal to the dollar amount of such payment divided by the Per Share Parent Share Value as of the Business Day prior to the date of such payment);
(c) other than with respect to any Agreed Indemnifiable Event, the Parent Indemnitees shall not be entitled to recover for any Losses Loss with respect to a particular breach or inaccuracy (whether individually or a series of related events, which shall constitute one event) unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Loss equals or exceeds $250,000 50,000.00 (the "Purchaser Loss Threshold"“Parent De Minimis Amount”);
(d) other than with respect to any Agreed Indemnifiable Event, at which time the Purchaser Indemnified Parties Parent Indemnitees shall not be entitled to recover all such Losses pursuant to Section 8.02(a) until the total amount which the Parent Indemnitees would recover under Section 8.02(a) (as limited by the provisions of Section 8.04(a), Section 8.04(b), and Section 8.04(c)), but for this Section 8.04(d), exceeds $3,000,000.00 (the “Parent Deductible”), in which case, the Parent Indemnitees shall only be entitled to recover Losses in excess of such amount;
(e) subject to Section 8.04(g), the aggregate amount of all Losses payable to the Parent Indemnitees pursuant to Section 8.02(a) or otherwise under this Agreement or any certificates delivered hereunder shall not exceed $50,000,000.00 (the “Absolute Cap”);
(f) the amount of Losses relating to any Agreed Indemnifiable Events in the Purchaser Loss Threshold. Except for those Losses aggregate recoverable under Section 8.02(a)(ii) shall be determined net of any resolution in favor of Parent, the Surviving Corporation or any of their respective Subsidiaries in connection with the Retained Event;
(g) other than with respect to claims made pursuant to Section 8.02(a)(ii) (which arise out are subject to the Absolute Cap) and other than in the case of the indemnification for Taxes under Article 7 intentional common law fraud or a breach of intentional misconduct related to the representations and warranties contained set forth in this Agreement, from and after the Closing, the Indemnity Escrow Account shall be the sole source of recovery with respect to Losses of the Parent Indemnitees under this Agreement or any certificates delivered hereunder, including Losses indemnifiable pursuant to Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization8.02(a)(i), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are Parent Indemnitees be entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an recover more than the amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder Indemnity Escrow Account as such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall amount may be reduced by over time;
(h) for such time as the Indemnity Escrow Account has a positive balance, the Parent Indemnitees may only seek recovery for indemnified claims under Section 8.02(a)(ii) from the Indemnity Escrow Account;
(i) the Seller Indemnitees shall not be entitled to recover a Loss for any particular breach or inaccuracy unless such Loss equals or exceeds $50,000.00 (whether individually or a series of related events, which shall constitute one event) (the “Seller De Minimis Amount”);
(j) the Seller Indemnitees shall not be entitled to recover Losses pursuant to Section 8.02(b)(i) until the total amount which the Seller Indemnitees would recover under Section 8.02(b)(i) (as limited by the provisions of Section 8.04(a), Section 8.04(b) and Section 8.04(i)), but for this Section 8.04(j), exceeds $3,000,000.00, in which case, the Seller Indemnitees shall only be entitled to recover Losses in excess of such amount;
(k) the aggregate amount of all Losses payable to the Seller Indemnitees pursuant to Section 8.02(b) or otherwise under this Agreement or any insurance proceeds which the Purchaser Indemnified Parties recover certificates delivered hereunder shall not exceed $30,000,000.00, other than with respect to such Loss; (ii) any indemnityclaims against Parent based on Rule 10b-5 or Section 18 of the Exchange Act, contribution or other similar payment for which the Purchaser Indemnified Parties receive from any third party with respect limitations set forth in Section 3.20, Section 4.12 and this ARTICLE VIII (including this Section 8.04) shall not apply;
(l) the Parent Indemnitees shall not be entitled to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of recover Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of extent the amount of such Tax Benefit.Losses has been accrued (without duplication) or is included for purposes of the calculation of the Final Cash Merger Consideration as agreed by the parties or resolved by the Accounting Firm;
(bm) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder nothing in this ARTICLE VIII regarding indemnification rights and obligations shall be reduced by deemed to override any obligations with respect to mitigation of damages existing under applicable law; and
(n) except for Losses relating to or arising under (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect a Third Party Claim that are payable to such Loss; and a third party or (ii) Section 8.02(a)(ii) (whether or not payable to a third party), Losses shall not include any indemnitydiminution in value or any punitive, contribution incidental, consequential, special or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation indirect damages, including loss of Purchaser to deliver the Merger Consideration and the aggregate amount future revenue, profits, multiples of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreementprofits, or the Stockholder Representative Agreementincome, and in any or loss of the agreements contemplated hereby business reputation or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderopportunity.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Neither the Selling Parties nor Purchasing Parties shall not be entitled have any liability (for indemnification or otherwise) with respect to recover claims under Section 9.2(a) or Section 9.3(a), respectively, until the total of all Damages with respect to such matters exceeds $250,000 and then only for any Losses unless and until the amount by which such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, Damages exceed $250,000 (the "Purchaser Loss ThresholdBasket"). However, at which time this Section 9.5(a) will not apply to matters arising from breaches of Sections 2.1(c), 2.3, 2.16, 2.22, 3.3, and 4.11, and with regard to such Sections, the Purchaser Indemnified Parties shall be entitled to recover seek compensation for all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect Damages without regard to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitBasket.
(b) Each Loss for In computing the amount of Damages which are sustained, suffered or incurred by an Indemnitee, the Company Stockholder Indemnified Indemnifying Party or Parties are entitled to be indemnified hereunder shall be reduced by given the benefit of (i) insurance proceeds, if any (up to the maximum amount of any insurance proceeds which Damages), that the Company Stockholder Indemnified Parties recover with respect Indemnitee shall have the right to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Lossreceive.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate Two Million Dollars ($2,000,000) principal amount of Credit Agreement Debt being paid the Notes (from the Sellers of Common Stock) shall be held by Purchaser as security for Sellers' indemnification obligations, but the holders of such Notes shall be entitled to receive all interest and principal on such Notes so long as such holder of the Notes shall not be in default of his or her indemnification obligations. Such Notes (or the excess over claimed indemnification) shall be delivered to the holders of such Notes if no claim for indemnification has been made (or if made has been resolved) on the second anniversary of the Closing Date. Any Seller receiving Notes may pay for his, hers or its indemnification obligation by surrendering Notes issued to him, her or it, which will be valued for payment purposes at Closing in accordance with the terms principal amount thereof, plus accrued but unpaid interest. If the Damages are less than the Notes, the outstanding principal balance of this AgreementNotes shall remain outstanding as to that portion thereof exceeding the Damages. Purchaser will give such Seller notice of the adjusted outstanding principal amount of such Notes.
(d) Notwithstanding anything to the contrary contained hereinin this Agreement, if the Closing occurs, no claim for indemnification may be asserted by any Purchasing Party with respect to any matter discovered by or known to any Purchasing Party on or before the Closing Date.
(e) For purposes of this Article IX, if no agreement can be reached after good faith negotiation between the parties, either Purchaser, on behalf of Purchasing Parties, or Sellers Representative, on behalf of Selling Parties, may, by written notice to the other, demand arbitration of the matter unless the amount of the Damages is at issue in pending litigation with a third party, in which event arbitration shall not be commenced until such amount is ascertained or both parties agree to arbitration; and in either such event the Indemnification Escrow Agreementmatter shall be settled by arbitration conducted by one arbitrator. Purchaser and Sellers Representative shall agree on the arbitrator; provided, however, that if Purchaser and Sellers Representative cannot agree on the Working Capital Escrow Agreementarbitrator, either Purchaser or Sellers Representative can request that the Stockholder Representative American Arbitration Association select the arbitrator. Any such arbitration shall be held in Sacramento, California, in each case under the commercial rules then in effect of the American Arbitration Association. The arbitrator shall set a limited time period and establish procedures designed to reduce the cost and time for discovery while allowing the parties an opportunity, adequate in the sole judgment of the arbitrator, to discover relevant information from the opposing parties about the subject matter of the dispute. The arbitrator shall rule upon motions to compel or limit discovery and shall have the authority to impose sanctions, including attorneys' fees and costs, to the same extent as a court of law or equity, should the arbitrator determine that discovery was sought without substantial justification or that discovery was refused or objected to without substantial justification. The decision of the arbitrator shall be written, shall be in accordance with applicable law and with this Agreement, and shall be supported by written findings of fact and conclusions of law which shall set forth the basis for the decision of the arbitrator. The decision of the arbitrator as to the validity and amount of any claim disputed by the parties hereto shall be binding and conclusive upon the parties to this Agreement, and notwithstanding anything in Article IX hereof, the parties shall be required to act in accordance with such decision. Judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction.
(f) For purposes of this Section 9.5(f), in any arbitration hereunder in which any disputed claim or the amount is at issue, the party seeking indemnification shall be deemed to be the non-prevailing party unless the arbitrator awards the party seeking indemnification more than one-half (1/2) of the agreements contemplated hereby or therebyamount in dispute, in which case the Person against whom indemnification is sought shall be deemed to be the non-prevailing party. The non-prevailing party to an arbitration shall pay its own expenses, the maximum aggregate liability fees of any Company Stockholder the arbitrator and the expenses, including attorneys' fees and costs, reasonably incurred by the other party to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderarbitration.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights to indemnification pursuant to the provisions of this Agreement are subject to the following limitations:
(a) The Purchaser Indemnified Parties the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.1(a) (other than Losses unless and relating to breaches of the Fundamental Representations) until such time as the total amount of Losses in the aggregate for (or series of related Losses) which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Buyer Indemnitees would recover under Section 8.1(a) exceeds $250,000 275,000 (the "Purchaser Loss Threshold"“Deductible”), at which time and to the Purchaser Indemnified Parties extent Losses claimed exceed the Deductible, the Buyer Indemnitees shall be entitled to recover all such Losses in excess of the Deductible;
(b) the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.1(a) relating to breaches of Section 4.12 (Financial Statements) until the total amount of Losses (or series of related Losses) which the Purchaser Loss Threshold. Except for those Losses which arise out of Buyer Indemnitees would recover under Section 8.1(a) exceeds $250,000 (the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization“Financial Statements Deductible”), and Section 2.16 (Tax Matters) or actual fraudto the extent Losses claimed exceed the Financial Statements Deductible, the Buyer Indemnitees shall be entitled to recover all Losses in excess of the Financial Statements Deductible. The Parties acknowledge that they have engaged in extensive discussion together and in conjunction with the Company’s auditors regarding the calculation of EBITDA, the amount of accounts receivable, the allowance for doubtful accounts, and working capital, in each case, of the Group Companies and as set forth on the attached Exhibit D. The Parties acknowledge their agreement with Exhibit D based upon the facts and circumstances as known at such time of agreement, and further acknowledge and agree that no event shall the Losses for which the Purchaser Indemnified Parties are entitled to indemnification claims can be indemnified hereunder exceed, made by Buyer (i) with respect to the matters set forth on Exhibit D, unless such indemnification claims are based on the development and/or disclosure of, facts and/or circumstances, which such facts and circumstances were not taken into account in the preparation of Exhibit D, thereby resulting in an error and/or omission with respect to the matters contained in Exhibit D and (ii) for any Company Stockholder, Losses solely arising from any restatements of the Financial Statements resulting from changes to applicable accounting rules or regulations or a change in interpretation of such accounting rules or regulations or a change in a policy or practice at Buyer or Buyer’s Affiliates election from historical policy or practice; and
(c) the Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 8.1 in the aggregate in excess of an amount equal to $6.0 million, and in any event Losses with respect to forty percent (40%) of the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 Purchase Price (Organizationthe “Cap”), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect other than Losses relating to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; Pre-Closing Taxes, (ii) any indemnitybreach of any covenant made by Seller in this Agreement, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to fraud committed by the Seller or any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability its Affiliates or (iv) any breach of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitFundamental Representation.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Radiation Therapy Services Holdings, Inc.)
Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees to indemnification pursuant to the provisions of this Agreement are subject to the following limitations, other than in the event of Actual Fraud:
(a) The Purchaser Indemnified Parties the amount of any and all Losses shall be determined net of (i) any amounts actually recovered by the Buyer Indemnitees under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses; provided, however, that the Buyer Indemnitees shall be under no obligation to litigate against any key customer or key supplier and shall have the right to assert multiple claims under any insurance policy in the order it deems appropriate in its sole judgment; provided, further, that the amount deemed to be so received under insurance policies shall be net of the deductible EAST\134549672.25 71 for such policies and net of the out-of-pocket costs incurred by such Buyer Indemnitee in connection with obtaining such proceeds, and (ii) any net Tax benefits actually realized by the Buyer Indemnitees (or their direct or indirect beneficial owners) with respect to such Losses with respect to Tax Returns for the year of such Loss and the immediately succeeding year;
(b) the Buyer Indemnitees shall not be entitled to recover for any Losses particular Loss (or series of related Losses) pursuant to Section 9.2(a)(i) (other than claims arising out of or resulting from the breach of a Fundamental Representation) unless and until such time as Loss (or series of related Losses) equals or exceeds $30,000, after which point the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall Buyer Indemnitees will be entitled to recover all from the first dollar of such Losses (subject to the other limitations set forth in this Article 9);
(c) except for any breach of any Fundamental Representation, the Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(a)(i) until the total amount which the Buyer Indemnitees would recover under Section 9.2(a)(i) (as limited by the provisions of this Section 9.4) exceeds $1,635,000 (the “Deductible”), in which case, the Buyer Indemnitees shall only be entitled to recover Losses in excess of the Deductible;
(d) subject to Section 9.6, (i) except for any breach of any Fundamental Representation, the Indemnity Escrow Amount remaining at any given time in the Indemnity Escrow Account (the “Cap”) shall be the sole and exclusive source of recovery with respect to any Losses indemnifiable pursuant to Section 9.2(a), and in no event shall the Buyer Indemnitees be entitled to recover more than the amount of the Purchaser Indemnity Escrow Amount pursuant to Section 9.2(a) in the aggregate, (ii) the Indemnity Escrow Amount remaining at any given time in the Indemnity Escrow Account and the Holdback Amount retained by Sellers’ Representative pursuant to Section 9.9 shall be the sole and exclusive sources of recovery with respect to any Losses indemnifiable pursuant to Section 9.2(a)(i) for any breach of any Fundamental Representation, (iii) the Indemnity Escrow Amount remaining at any given time in the Indemnity Escrow Account and the Tax Escrow Amount remaining at any given time in the Tax Escrow Account shall be the sole and exclusive sources of recovery with respect to any Losses indemnifiable pursuant to Section 6.13, and (iv) the Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(a) or Section 6.13 if such Loss Threshold. Except is due to the Buyer Indemnitees filing a Tax Return, or taking a position for those Tax purposes, that is inconsistent with both (A) applicable Law and (B) a position taken on a Tax Return that was filed on or before the Closing Date;
(e) in no event shall any Buyer Indemnitees be entitled to receive indemnification for the same Loss more than once under this Article 9 or Section 6.13(j) even if a claim for indemnification in respect of such Loss has been made as a result of a breach of more than one (1) representation, warranty, covenant or agreement contained in this Agreement;
(f) each Indemnified Party shall, if and to the extent required by applicable Laws, use good faith efforts to mitigate any Loss for which such Indemnified Party seeks indemnification hereunder;
(g) except for the Qualified Representations, the representations and warranties set forth in this Agreement or any certificate or schedule delivered in connection herewith that are qualified as to “material,” “materiality,” “material respects,” “Company Material Adverse Effect” EAST\134549672.25 72 or words of similar import or effect shall be deemed to have been made without any such qualification for purposes of determining whether a breach of any such representation or warranty has occurred and the amount of Losses which arise resulting from, arising out of or relating to any such breach;
(h) in no event shall any Buyer Indemnitee be entitled to indemnification pursuant to this Article 9 or Section 6.13 with respect to a specific Loss to the extent such Loss is (i) clearly and separately reserved for on the face of the Latest Balance Sheet or in the footnotes to any other Financial Statements or (ii) is included in the calculation of the Purchase Price, as finally determined in accordance with Section 2.4(b); and
(i) no Buyer Indemnitee shall make any claim for indemnification with respect to any environmental investigatory, corrective, remedial or response action or report to any Governmental Entity (collectively, “Response Action”) except to the extent such Response Action is (i) affirmatively required by Environmental Laws, or an Order or written demand by a Governmental Entity; (ii) reasonably necessary to respond to substantial endangerment to human health, safety, the environment, or natural resources; (iii) required to respond to a bona fide third party claim or bona fide employee complaint arising under Environmental Laws or alleging exposure to Hazardous Substances; (iv) required in connection with a bona fide maintenance project to the extent consistent with industry practice; or (v) a bona fide report to any Governmental Entity consistent with industry practice and not for Taxes under Article 7 the affirmative purpose of seeking an Order or written demand for Response Action, and is attributable to a breach of the representations and warranties contained set forth in Section 2.1 3.11, and then only to the extent any such Response Action is conducted in a cost-effective manner and required to attain compliance with minimum remedial standards applicable under Environmental Laws based on continued industrial or commercial uses, employing risk based standards and institutional controls where available.
(Organizationj) Notwithstanding anything contained herein to the contrary, but subject to Section 9.6, after the Closing, (i) on the date that the Indemnity Escrow Amount remaining in the Indemnity Escrow Account is reduced to zero, the Buyer Indemnitees shall have no further rights to indemnification from any person under Section 9.2(a) or otherwise under or pursuant to this Agreement (other than in the case of a breach of the Fundamental Representations) and (ii) on the date that the Indemnity Escrow Amount and the Tax Escrow Amount remaining in the Indemnity Escrow Account and the Tax Escrow Account, respectively, is reduced to zero, the Buyer Indemnitees shall have no further rights to indemnification from any person under Section 6.13(j). In any case where a Buyer Indemnitee recovers, under insurance policies (but subject to Section 9.6) or from other collateral sources, any amount in respect of a matter for which such Buyer Indemnitee was indemnified pursuant to Section 9.2(a)(i) or Section 6.13(j), Section 2.2 such Buyer Indemnitee shall promptly pay over to Sellers’ Representative the amount so recovered (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization)after deducting therefrom the amount of the expenses incurred by such Buyer Indemnitee in procuring such recovery, and Section 2.16 (Tax Matters) or actual fraud, in no event shall the any Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches Buyer Indemnitee had no other source of Sections 2.1 (Organizationrecovery), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall but not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion in excess of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by sum of (i) the any amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect previously so paid to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount behalf of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount Buyer Indemnitee in respect of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; matter, and (ii) any indemnity, contribution amount expended by Sellers in pursuing or other similar payment which the Company Stockholder Indemnified Parties receive from defending any third party with respect to claim arising out of such Loss.
(c) This matter under Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.9.3. EAST\134549672.25 73
Appears in 1 contract
Samples: Purchase Agreement (Cimpress N.V.)
Limitations on Indemnification Obligations. The rights of Buyer Indemnitees to indemnification pursuant to the provisions of Section 8.2(a) are subject to the following limitations:
(a) The Purchaser Indemnified Parties the amount of any and all Losses of Buyer Indemnitees will be determined net of any amounts actually recovered by Buyer Indemnitees under insurance policies with respect to such Losses; provided that if, following the payment of any indemnification amounts pursuant to Section 8.2(a), Buyer, the Company or any of their Affiliates recover any amounts under insurance policies with respect to such Losses, then the applicable Buyer Indemnitees shall reimburse the Escrow Account or Seller, as applicable, the amount of such insurance recoveries to the extent such recoveries were previously paid out of the Escrow Fund or by Seller;
(b) Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.2(a) unless such Loss equals or exceeds $15,000; provided that a succession of Losses unless and until such time as less than $15,000 may be aggregated for purposes of satisfying the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes $15,000 threshold set forth in Article 7this Section 8.4(b); and provided further that amounts paid in connection with the Pending Tax Liability and the ABS Agreement shall be excluded from, exceed and not required to meet, this $250,000 15,000 threshold amount;
(the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall c) Buyer Indemnitees will not be entitled to recover all such Losses in excess pursuant to Section 8.2(a)(i) until the total amount which Buyer Indemnitees would recover under Section 8.2(a)(i) (as limited by the provisions of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations Sections 8.4(a) and warranties contained in Section 2.1 (Organization8.4(b)), but for this Section 2.2 (Subsidiaries8.4(c), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization)exceeds the Threshold Amount, and Section 2.16 (then only for the excess over the Threshold Amount; provided however that amounts paid in connection with the Pending Tax Matters) or actual fraud, in no event shall Liability and the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this ABS Agreement shall be several excluded from, and not jointrequired to meet, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such LossThreshold Amount; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.and
(d) Notwithstanding anything at any time Buyer Indemnitees (x) pursuant to this Agreement, will be entitled to recover no more in the aggregate than the Indemnity Cap; and (y) pursuant to this Agreement, will not be entitled to recover Losses from any source other than the Escrow Account, provided that, subject to the contrary contained hereinsurvival limitations set forth in Section 8.1, in after termination of the Indemnification Escrow AgreementAccount or exhaustion of the Escrow Fund, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder Buyer Indemnitees may seek indemnification directly from Seller for Losses to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed extent aggregate indemnification for Losses theretofore pursuant to Section 8.2(a) has not exceeded the amount of Common Merger Consideration actually received by such Company StockholderIndemnity Cap.
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Limitations on Indemnification Obligations. The obligations of the parties to make indemnification payments pursuant to Section 8.1 and Section 8.2 are limited as follows:
(a) The Purchaser Indemnified Parties Sellers shall not be entitled to recover have no liability for any Losses indemnification unless and until such time as until, and only to the Losses in extent that, the aggregate amount of all Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed is sought by Buyer exceeds $250,000 (the "Purchaser Loss ThresholdIndemnification Deductible Cap"), at which time ;
(b) Sellers shall have no liability for indemnification to the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of extent that the amount of all payments made by Sellers on account of Losses exceeds $4,150,000 (the Purchaser Loss Threshold"Indemnification Cap");
(c) Buyer shall have no liability for indemnification unless and until, and only to the extent that, the aggregate amount of all Losses for which indemnification is sought by Seller exceeds the Indemnification Deductible Cap; and
(d) Buyer shall have no liability for indemnification to the extent that the amount of all payments made by Buyer on account of Losses exceeds the Indemnification Cap. Except for those Losses which arise out of Notwithstanding anything to the indemnification for Taxes under Article 7 or a contrary in this Agreement, the Indemnification Deductible Cap and the Indemnification Cap shall not apply to (i) any breach by Sellers of the representations and warranties contained in Section 2.1 4.1 (OrganizationOrganization of the Companies; Qualification; Capitalization.), Section 2.2 4.2 (SubsidiariesAuthority; No Violation or Consent), Section 2.4 4.3 (Execution and DeliveryNo Subsidiaries or Investments), Section 2.6 4.16(a) (CapitalizationTaxes-Subchapter S) Section 4.17 (Transactions with Shareholders, Officers, Directors, Etc.) and Section 4.18 (Brokers), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnitybreach by a Seller of the representations and warranties in Article V (Representations and Warranties of each Seller), contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not jointresulting from fraud, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
or (b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (iiiv) any indemnityliability arising pursuant to Section 8.1(c), contribution (d), (e), or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(cf) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein; provided further, in the Indemnification Escrow Agreementhowever, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability that for purposes of any Company Stockholder indemnification claim arising under Section 8.1(e), an "Indemnification Cap" shall apply but shall be deemed to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderbe $10,000.
Appears in 1 contract
Limitations on Indemnification Obligations. (ai) The Purchaser Indemnified Parties Sellers’ and Seller Affiliates’ indemnification obligations shall not be entitled survive for a period of 36 months after the Closing Date, except for claims brought prior to recover for any Losses unless such date which shall survive indefinitely, and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled except that Sellers’ and Seller Affiliates’ indemnification obligation with respect to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representation and warranty at paragraphs 4.4, 4.5, 4.9 and 4.14 and shall survive for the greater of 36 months or the statute of limitations applicable to the subject matter of such representations and warranties contained and shall not be limited in Section 2.1 amount.
(Organizationii) Sellers’ and Seller Affiliates’ indemnification obligations arising out of paragraphs 11.2(a)(iii), Section 2.2 (Subsidiaries11.2(a)(iv), Section 2.4 11.2(a)(v) and 11.2(b) above shall survive the Closing for the greater of 36 months or the statute of limitations applicable to the subject matter of such express indemnification obligation, except for claims brought by a Buyer Indemnified Person prior to such date which shall survive indefinitely.
(Execution iii) Sellers and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in Seller Affiliates shall have no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, liability with respect to Losses under paragraph 11.2 until the total of all Losses exceeds $100,000 and then only for the amount by which the Losses exceed $100,000. However, this paragraph 11.2(c)(iii) shall not apply to Losses arising out of fraud by any Company StockholderSeller or Seller Affiliates.
(iv) Buyer and Parent shall have no liability with respect to Losses under paragraph 11.3 until the total of all Losses exceeds $100,000 and then only for the amount by which the Losses exceed $100,000. However, this paragraph 11.2(c)(iv) shall not apply to Losses arising out of fraud by Buyer or Parent or in connection with any Losses arising out of Buyer’s or Parent’s default under the Purchase Note, after applicable cure periods and subject to Buyer’s set-off rights
(v) The aggregate liability of Sellers and Seller Affiliates with respect to claims for indemnification shall not exceed an amount equal to $6.0 millionthe Purchase Price, except that this limitation on liability shall not apply to Losses falling within the scope paragraphs 11.2(b)(ii) or (iii) above, and any Losses falling within the scope of Sellers’ and Seller Affiliates’ indemnification obligation in any event paragraphs 11.2(b)(ii) or (iii) shall not be included within the calculation of aggregate Losses for purposes of such limitation.
(vi) The aggregate liability of Buyer and Parent with respect to the claims for indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitPurchase Price.
(bvii) Each Loss for which For purposes of the Company Stockholder Indemnified Parties are entitled indemnification deductible and cap provisions of paragraphs 11.2(c)(iii) through (vi) of the Home Health Agreement, along with the setoff provisions of paragraph 11.5, the Apex Purchase Agreements shall be considered to be indemnified hereunder shall be reduced by a single agreement (i) e.g., the amount of any insurance proceeds which aggregate deductible for the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 Apex Purchase Agreements is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration $100,000 and the “Purchase Price” limitation on certain indemnification rights is the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with “Purchase Price” payable under the terms of this Agreementthree Apex Purchase Agreements.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
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Limitations on Indemnification Obligations. The rights of the Indemnified Parties to indemnification pursuant to the provisions of this Article IX are subject to the following limitations:
(a) The Purchaser With respect to each indemnification obligation in this Article IX: (i) the amount of any Loss will be determined on an After-Tax Basis, (ii) all Losses shall be net of any Eligible Insurance Proceeds that have already been paid at the time the amount of such Losses are determined and (iii) in no event shall an Indemnifying Party have liability to the Indemnified Parties shall not be entitled to recover Party for any Losses unless consequential, special, indirect or punitive damages, lost profits, diminution in value or similar items, except if and until to the extent any such time as damages are recovered against an Indemnified Party pursuant to a Third Party Claim.
(b) None of the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all for any particular Loss pursuant to Sections 9.2(a) or 9.3(a) unless such Loss (or series of related Losses) equals or exceeds $50,000 (each, a “Qualifying Loss”); provided, however, that this limitation shall not apply to Losses in respect of claims for breaches of any Fundamental Representation.
(c) None of the Parent Indemnified Parties or the Seller Indemnified Parties shall be entitled to recover Qualifying Losses pursuant to Sections 9.2(a) 83 or 9.3(a) (as applicable) until the total amount of Qualifying Losses which the Parent Indemnified Parties or Seller Indemnified Parties, respectively, would recover under Sections 9.2(a) or 9.3(a), but for this Section 9.5(c), exceeds $10,350,000 (the “Deductible”), whereupon the Parent Indemnified Parties and the Seller Indemnified Parties, respectively, shall be entitled to indemnification only for such Qualifying Losses in excess of the amount Deductible; provided, however, that the Deductible shall not apply to Losses in respect of claims for breach of any Fundamental Representation.
(d) Notwithstanding anything contained herein to the Purchaser Loss Threshold. Except for those Losses which arise out contrary, nothing in this Section 9.5 shall limit any Person’s rights to recovery in respect of the indemnification for Taxes under fraud or willful misconduct.
(e) For all purposes of this Article 7 IX, any inaccuracy or a breach of the representations and warranties contained in this Agreement (other than the Company’s representations and warranties in the first sentence of Section 2.1 (Organization3.6(a), Section 2.2 (Subsidiaries3.7(a), the first sentence of Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization)3.8, and Section 2.16 (Tax MattersSections 3.9(a) and 3.14, shall be determined without reference to the terms “material,” “materially,” “Material Adverse Effect,” “material adverse effect” or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled other similar qualifications as to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and materiality contained or incorporated directly or indirectly in any event Losses with respect to the indemnification for Taxes under Article 7 such representation or with respect to breaches warranty.
(f) For purposes of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) determining the amount of any insurance proceeds which Losses subject to indemnification under Section 9.2, the Purchaser Indemnified Parties recover with respect to amount of such Loss; Losses will be determined net of all liabilities that are (i) properly accrued, (ii) any indemnity, contribution or other similar payment which specifically accrued for the Purchaser Indemnified Parties receive from any third party with respect matter subject to such Loss; indemnification and (iii) an amount equal reflected in the Final Closing Working Capital.
(g) Any portion of Losses to any net Tax Benefits be reimbursed by the Responsible Party determined to be covered, in whole or in part, by Third Party Insurance coverage of the Purchaser Company as of the date hereof and any D&O “tail” coverage pursuant to Section 5.10, the Indemnified Parties attributable Party shall promptly give notice thereof to the Responsible Party (a “Notice of Insurance”). If the Responsible Party so requests within one hundred eighty (180) calendar days after receipt of a Notice of Insurance, the Indemnified Party shall use its commercially reasonable efforts to collect the maximum amount of insurance proceeds thereunder, in which event all such Lossproceeds actually received, net of costs reasonably incurred by the Indemnified Party in seeking such collection, shall be considered “Eligible Insurance Proceeds”. The liability Any amount payable by a Responsible Party pursuant to this Article IX shall be paid promptly and payment shall not be delayed pending any determination of Eligible Insurance Proceeds. In any case where an Indemnified Party recovers from a third Person any Eligible Insurance Proceeds and/or any other amount in respect of any Company Stockholder Losses for damages under which a Responsible Party has actually reimbursed such Indemnified Party pursuant to this Agreement Article IX, such Indemnified Party shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited promptly pay over to the Common Merger Consideration actually received by Responsible Party such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by Eligible Insurance Proceeds and/or the Purchaser Indemnified Parties amount so recovered (after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of deducting therefrom the amount of expenses incurred by it in procuring such Tax Benefit.
(b) Each Loss for which recovery), but not in excess of the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by sum of (i) any amount previously paid by the amount Responsible Party to or on behalf of any insurance proceeds which the Company Stockholder Indemnified Parties recover with Party in respect to of such Loss; claim and (ii) any indemnity, contribution amount expended by the Responsible Party in pursuing or other similar payment which the Company Stockholder Indemnified Parties receive from defending any third party with respect to claim arising out of such Lossmatter.
(ch) This Section 6.8 is in no way intended Any Indemnified Party shall take all commercially reasonable steps to affect the obligation mitigate any Losses incurred by such party upon and after becoming aware of Purchaser any event or condition that would reasonably be expected to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementgive rise to any indemnification rights hereunder.
(di) Notwithstanding anything If the Indemnified Party receives any payment from a Responsible Party in respect of any Losses pursuant to Sections 9.2 or 9.3 and the contrary contained herein, in Indemnified Party could have recovered all or a part of such Losses from a third party (a “Potential Contributor”) based on the Indemnification Escrow Agreementunderlying claim asserted against the Responsible Party, the Working Capital Escrow Agreement, or Indemnified Party shall assign such of its rights to proceed against the Stockholder Representative Agreement, and in any of Potential Contributor as are necessary to permit the agreements contemplated hereby or thereby, Responsible Party to recover from the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed Potential Contributor the amount of Common Merger Consideration actually received by such Company Stockholderpayment.
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Limitations on Indemnification Obligations. The right of Purchaser to indemnification pursuant to the provisions of Section 6.2is subject to the following limitations:
(a) The the amount of any and all Losses shall be determined net of any amounts actually recovered by Purchaser Indemnified Parties or by Purchaser indemnitees, as the case may be, under insurance policies with respect to such Losses;
(b) Purchaser shall not be entitled to recover for any Losses unless and until such time as pursuant to Section 6.2until the Losses in the aggregate for total amount which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed would recover under Section 6.2exceeds $250,000 (the "Purchaser Loss “Threshold"”), at in which time the case, Purchaser Indemnified Parties shall be entitled to recover for all Losses up to, including, and in excess of the Threshold; and
(c) In no event shall the definition of Knowledge impose any personal liability on the Person(s) included therein, except to the extent such Losses Persons(s) are found to have acted fraudulently, as determined by a court of competent jurisdiction. Notwithstanding the foregoing, the right of Purchaser to indemnification pursuant to the provisions of Section 6.2 with respect to breaches of the representations and warranties in connection with amounts payable to licensors of Intellectual Property Licenses (“License Payable Warranties”), as set forth in Exhibit D to the Disclosure Schedule, shall not be subject to or otherwise limited by the Threshold. Purchaser shall be able to immediately seek indemnification from Company for any additional amount paid to a licensor, or a substitute licensor for equivalent technologies, in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed shown with respect to a Company Stockholder licensor shown on Exhibit D in connection with Purchasers’ efforts to secure a license with one or more such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnitylicensors, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing all in accordance with the terms of this Escrow Agreement.
(d) Notwithstanding anything . For clarity, while indemnity claims with respect to License Payable Warranties are not subject to the contrary contained hereinThreshold, they are to be taken into account in determining whether the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder threshold has been met with respect to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderindemnity claims not relating to License Payable Warranties.
Appears in 1 contract
Samples: Asset Purchase Agreement (Clearone Communications Inc)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, the rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 9.2(a) and Section 9.2(b) are subject to the following limitations:
(a) the amount of any and all Losses shall be determined net of any amounts actually recovered by any Buyer Indemnitees under insurance policies (net of any Taxes and other expenses incurred in connection with obtaining such amounts, as well as any increased premium costs associated therewith) with respect to such Losses, provided, however, that the Indemnification Escrow AgreementBuyer Indemnitees and their Affiliates shall treat such amounts recovered under insurance policies as an adjustment to the Purchase Price for U.S. federal and applicable state and local income Tax purposes to the maximum extent permitted under applicable Legal Requirements;
(b) the Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(a)(i) or Section 9.2(b)(i) (other than with respect to breaches of Fundamental Representations and Section 3.16) until the total amount which the Buyer Indemnitees would recover under Section 9.2(a)(i) or Section 9.2(b)(i) (as limited by the provisions of Section 9.4(a)), but for this Section 9.4(b), exceeds $1,278,750, in which case, the Working Capital Buyer Indemnitees shall only be entitled to recover Losses in excess of such amount, subject to the other limitations set forth herein;
(c) the Indemnity Escrow Agreement, Funds remaining at any given time shall be the sole source of recovery with respect to Losses indemnifiable pursuant to Section 9.2(a) or the Stockholder Representative AgreementSection 9.2(b), and in any of no event shall the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder Buyer Indemnitees be entitled to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed recover more than the amount of Common Merger Consideration actually received the funds available in the Indemnity Escrow Account pursuant to Section 9.2(a) or Section 9.2(b) in the aggregate;
(d) in no event shall a Buyer Indemnitee be entitled to indemnification pursuant to this ARTICLE 9 with respect to a specific Loss to the extent such Loss is specifically included as a line-item deduction in the calculation of the Purchase Price, as finally determined in accordance with Section 2.4(b); and
(e) Notwithstanding anything herein to the contrary, no Buyer Indemnitee shall have any right to indemnification hereunder for any Losses attributable to Taxes (i) of any Group Company for a post-Closing Tax period (or portion thereof) (other than as a result of breach of representations contained in Section 3.16(f)(ii), 3.16(f)(iii), 3.16(f)(iv), 3.16(f)(v) or 3.16(h)), (ii) as a result of any transaction occurring on the Closing Date after the Closing outside the Ordinary Course or (iii) attributable to any breach by such Company StockholderBuyer and/or its Affiliates of any covenant in this Agreement. Notwithstanding anything contained herein to the contrary, after the Closing, on the date that the Indemnity Escrow Funds are reduced to zero, the Buyer Indemnitees shall have no further rights to indemnification under Section 9.2(a) or Section 9.2(b).
Appears in 1 contract
Samples: Stock Purchase Agreement (Fox Factory Holding Corp)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled Seller's and the Shareholders' obligation to recover for any Losses unless and until such time as the Losses in the aggregate for which make indemnification payments to the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including on account of Indemnifiable Losses claimed under Section 9.1(a) shall not arise until the indemnification for Taxes set forth in Article 7, exceed aggregate amount of all Indemnifiable Losses claimed under Section 9.1(a) exceeds One Hundred Thousand Dollars ($250,000 100,000) (the "Purchaser Loss ThresholdThreshold Amount"). Once the aggregate amount of Indemnifiable Losses claimed by the Purchaser Indemnified Parties under Section 9.1(a) exceeds the Threshold Amount, at which time the Purchaser Indemnified Parties shall then be entitled to recover all such Indemnifiable Losses, except those Indemnifiable Losses in excess that were used to reach the Threshold Amount. The foregoing Threshold Amount limitation shall not apply to, and the determination of whether the amount of the Purchaser Loss Threshold. Except for those Threshold Amount has been reached shall not include, any Indemnifiable Losses which arise out of the indemnification for Taxes under Article 7 or (i) relate to a breach by the Seller and the Shareholders of any of the representations and warranties contained in any of Section 2.1 (Organization)3.6, Section 2.2 (Subsidiaries)3.9, Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), 3.20 and Section 2.16 (Tax Matters) 3.26, or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive arise from any third party misrepresentation or breach of warranty made fraudulently or with respect intent to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefitdefraud or mislead or recklessly or with gross negligence.
(b) Each Loss for which The Purchaser's obligation to make indemnification payments to the Company Stockholder Seller Indemnified Parties are on account of Indemnifiable Losses claimed under Section 9.2(a) shall not arise until the aggregate amount of all Indemnifiable Losses claimed under Section 9.2(a) exceeds the Threshold Amount. Once the aggregate amount of Indemnifiable Losses claimed by the Seller Indemnified Parties as a result of the events and circumstances described in Section 9.2(a) exceeds the Threshold Amount, then the Seller Indemnified Parties shall then be entitled to be indemnified hereunder recover all such Indemnifiable Losses, except those Indemnifiable Losses that were used to reach the Threshold Amount. The foregoing Threshold Amount limitation shall be reduced by (i) not apply to, and the amount determination of whether the Threshold Amount has been reached shall not include, any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive Indemnifiable Losses arising from any third party misrepresentation or breach of warranty made fraudulently or with respect intent to such Lossdefraud or mislead or recklessly or with gross negligence.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration The Seller's and the Shareholders' aggregate obligation to make indemnification payments to the Purchaser Indemnified Parties on account of Indemnifiable Losses claimed under Section 9.1(a) shall not exceed an amount equal to Four Million Five Hundred Thousand Dollars ($4,500,000) (the "Cap"). The foregoing Cap limitation shall not apply to, and the determination of Credit Agreement Debt being paid whether the Cap has been reached shall not include, any Indemnifiable Losses which (i) relate to a breach by Purchaser at Closing the Seller and the Shareholders of any of the representations and warranties contained in accordance any of Section 3.6, Section 3.9, Section 3.20 and Section 3.26 or (ii) arise from any misrepresentation or breach of warranty made fraudulently or with intent to defraud or mislead or recklessly or with gross negligence. In addition, the terms foregoing Cap limitation shall not apply to, and the determination of this Agreementwhether the Cap has been reached shall not include, any Indemnifiable Losses which are due under Section 9.3 and satisfied by a payment from the Escrow Amount.
(d) Notwithstanding anything The Purchaser's aggregate obligation to make indemnification payments to the contrary contained herein, in Seller Indemnified Parties on account of Indemnifiable Losses claimed under Section 9.2(a) shall not exceed an amount equal to the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative AgreementCap. The foregoing Cap limitation shall not apply to, and in any the determination of whether the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any typeThreshold Amount has been reached shall not include, any liability in tort, contract Indemnifiable Losses arising from any misrepresentation or otherwise, shall never exceed the amount breach of Common Merger Consideration actually received by such Company Stockholderwarranty made fraudulently or with intent to defraud or mislead or recklessly or with gross negligence.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights of an Indemnified Party to indemnification pursuant to the provisions of Section 9(b) and Section 9(c) are subject to the following limitations:
(ai) The Purchaser Indemnified Parties the Buyer Indemnitees shall not be entitled to recover for any individual Losses unless and until pursuant to Section 9(b)(i)(A) or Section 9(c)(i)(E) if the total amount of such time as the Losses in the aggregate for individual Loss which the Purchaser Indemnified Parties are entitled to be indemnified hereunderBuyer Indemnitees would recover under Section 9(b)(i)(A) or Section 9(c)(i)(E) (as limited by the provisions of Section 9(e)(iv)), including the indemnification but for Taxes set forth in Article 7this Section 9(e)(i), exceed is less than $250,000 10,000 (the "Purchaser Loss Threshold"“Mini-Basket”); provided that (A) a series of related Losses shall be aggregated for purposes of this Section 9(e)(i) and (B) Losses that are less than the Mini-Basket shall be disregarded for purposes of Section 9(e)(iii);
(ii) the Buyer Indemnitees shall have no right to indemnification pursuant to Section 9(b)(i)(A) for Losses that are incurred to clean up or otherwise remediate any Hazardous Materials to the extent such cleanup or other remediation is not conducted in a reasonably cost-effective manner, taking into consideration (A) use of the relevant property (with respect to the Leased Property, as of the Closing Date), at which time (B) applicable Environmental Requirements, (C) available risk-based approaches, engineering controls, institutional controls, deed restrictions and activity and use limitations (if any) under applicable Environmental Requirements and permitted by the Purchaser Indemnified Parties relevant Governmental Entity with jurisdiction over the matter, (D) impact or threat to the environment or human health and (E) impact to or interference with the operations of the Buyer Indemnitees; provided that in no event shall such cleanup or other remediation be deemed to have not been conducted in a reasonably cost-effective manner for the purposes of the foregoing clause on the basis that such cleanup or other remediation does not include any engineering or institutional controls or other activity and use limitations or deed restrictions or is not based on any risk-based approach where such restrictions, limitations, controls or approach would unreasonably interfere with Buyer Indemnitees’ operation of the relevant property.
(iii) the Buyer Indemnitees shall not be entitled to recover all Losses pursuant to Section 9(b)(i)(A) or Section 9(c)(i)(E) until the total amount which the Buyer Indemnitees would recover under Section 9(b)(i)(A) and Section 9(c)(i)(E) (as limited by the provisions of Section 9(e)(iv)), but for this Section 9(e)(iii), exceeds $2,750,000 (the “Deductible”), in which case, the Buyer Indemnitees shall only be entitled to recover such Losses in excess of such amount;
(iv) the amount funds in the Escrow Account, at any given time, shall be the sole and exclusive source of the Purchaser Loss Threshold. Except for those recovery with respect to Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations indemnifiable pursuant to Section 9(b) and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization9(c), and Section 2.16 (Tax Matters) or actual fraudshall limit the liability of the Sellers and Optionholders, and in no event shall the Buyer Indemnitees be entitled to recover, or the liability of the Sellers and Optionholders exceed, more than the amount of the funds available in the Escrow Account pursuant to Section 2(a)(iv)(B), Section 9(b) and Section 9(c) in the aggregate;
(v) if an Indemnified Party does not use commercially reasonable efforts to mitigate Losses for which such Indemnified Party seeks indemnification pursuant to Section 9(b) or Section 9(c), the Purchaser Indemnifying Party shall not be required to indemnify the Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect Party to the indemnification for Taxes under Article 7 or with respect to breaches extent any such Losses could have been mitigated if the Indemnified Party had used such commercially reasonable efforts; Table of Sections 2.1 Contents
(Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (ivi) the amount of each Loss shall be determined net of any amounts actually recovered by the Indemnified Party which suffered such Loss under insurance proceeds policies or from other collateral sources (such as contractual indemnities of any Person which the Purchaser Indemnified Parties recover are contained outside of this Agreement) with respect to such Loss; (ii) any indemnity, contribution provided that such Indemnified Party shall use commercially reasonable efforts to pursue such recovery under available insurance policies or other similar payment available collateral sources;
(vii) in any case where an Indemnified Party recovers, under insurance policies or from other collateral sources, any amount in respect of a matter for which the Purchaser such Indemnified Parties receive from any third party with respect Party was indemnified pursuant to Section 9(b) or Section 9(c), such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement Party shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited promptly pay over to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by Indemnifying Party the Purchaser Indemnified Parties amount so recovered (after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of deducting therefrom the amount of the expenses incurred by such Tax Benefit.Indemnified Party in procuring such recovery), but not in excess of the sum of any amount previously so paid to or on behalf of such Indemnified Party in respect of such matter;
(bviii) Each Loss for which the Company Stockholder in no event shall any Indemnified Parties are Party be entitled to be indemnified hereunder recover or make a claim for any amounts in respect of special or indirect damages, lost revenues, income or profits, loss in value or diminution in value, of securities or assets or punitive damages and, in particular, no “multiple of profits” or “multiple of cash flow” or similar valuation methodology shall be reduced by (i) used in calculating the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect Losses, unless, in each case, paid or payable (and subsequently paid) to such Lossa third party; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.and
(cix) This for the avoidance of doubt, neither the Mini-Basket nor the Deductible shall be applicable to the indemnification obligations set forth in subclauses (B), (C), (D), (E) or (F) of Section 6.8 is in no way intended to affect the obligation 9(b)(i) or subclauses (A), (B), (C), (D), (F), (G) or (H) of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Section 9(c)(i). Notwithstanding anything contained in this Section 9 to the contrary contained hereincontrary, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment no indemnification obligation of any typeIndemnifying Party under this Agreement that has been finally judicially determined to have resulted from fraud on the part of any Indemnifying Party shall be subject to any limitation set forth above in this Section 9(e); provided that in no event shall the Buyer Indemnitees be entitled to recover Losses in the aggregate, under this Section 9, any liability in tort, contract other Section of this Agreement or any combination thereof or otherwise, shall never exceed in excess of the amount of Common Merger Consideration actually received by such Company StockholderFinal Purchase Price.
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Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreementrights of the Purchaser Indemnitees to any indemnification pursuant to Section 8.2 are subject to the following limitations:
(a) Except with respect to (i) claims for Fraud, and (ii) breaches of Fundamental Representations made by the Company, the Working Capital aggregate amount of Losses for which the Purchaser Indemnitees shall be entitled to indemnification by the Company Equityholders pursuant to Section 8.2(a)(i) and Section 8.2(a)(iii) will not exceed the Indemnity Escrow Amount;
(b) the amount of any and all Losses pursuant to Section 8.2(a) shall be determined net of any amounts actually recovered by the Purchaser Indemnitees under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement, or ) with respect to such Losses (after deducting therefrom the Stockholder Representative Agreement, and in any sum of the agreements contemplated hereby or thereby, the maximum aggregate liability increase of any Company Stockholder to insurance premiums incurred by such Purchaser Indemnitee as a result of its recovery under any insurance policy) and the Purchaser and Merger Sub, whether Indemnitees shall be required to use commercially reasonable efforts to timely pursue such recovery;
(c) the aggregate amount required to be paid by reason of indemnification, reimbursement or other payment obligation of any type, any liability the Company Equityholders under Section 8.2(a)(ii) shall in tort, contract or otherwise, shall never no event exceed the amount of Common Gross Merger Consideration actually received by each Company Equityholder;
(d) the Purchaser Indemnitees or the Seller Indemnitees, as applicable, shall not be entitled to recover Losses pursuant to Section 8.2(a)(i), Section 8.2(a)(iii), or Section 8.2(b)(i), other than with respect to claims for Fraud or resulting from or relating to a breach of any of the Fundamental Representations, until the total amount which the Purchaser Indemnitees would recover under Section 8.2(a)(i) and Section 8.2(a)(iii) or the Seller Indemnitees would recover under Section 8.2(b)(i), as applicable, (as limited by the provisions of this Article VIII and 11.14), is an amount equal to one-half of one percent (0.50%) of the Gross Merger Consideration (the “Threshold”), in which case the Purchaser Indemnitees or the Seller Indemnitees, as applicable, shall only be entitled to recover all Losses in excess of the Threshold;
(e) except with respect to claims arising from Fraud or breaches of the Fundamental Representations, the Indemnity Escrow Amount remaining at any given time in the Indemnity Escrow Account shall be the sole source of recovery, and in no event shall the Purchaser Indemnitees be entitled to recover more than the amount of the funds available in the Indemnity Escrow Account pursuant to Section 8.2(a)(i) and Section 8.2(a)(iii) in the aggregate;
(f) breaches of the Fundamental Representations made by the Company shall be satisfied: (i) first, from the Indemnity Escrow Account; (ii) second, by submission of claims by Parent pursuant to the R&W Insurance Policy until such time as the policy limit set forth in the R&W Insurance Policy has been reached; and (iii) thereafter, if the aggregate amount of indemnifiable Losses for breaches of the Fundamental Representations made by the Company Stockholderexceeds the policy limit set forth in the R&W Insurance Policy, then, against the Company Equityholders (solely to the extent of such excess) and subject to each of the limitations set forth in this Article VIII; provided that the aggregate amount required to be paid by the Company Equityholders under Section 8.2(a)(i) and Section 8.2(a)(iii) for breaches of Fundamental Representations shall in no event exceed the amount of Gross Merger Consideration actually received by each Company Equityholder. Notwithstanding anything to the contrary set forth in this Section 8.4, to the extent Parent is unable to recover Losses under the R&W Insurance Policy because (x) the policy limit under the R&W Insurance Policy has been met, and (y) a portion of Losses previously recovered under the R&W Insurance Policy related to breaches of the Fundamental Representations, then: (1) the total aggregate amount of the liability of the Company Equityholders for Losses with respect to any subsequent claims for breaches of any Fundamental Representations made by the Company shall be increased by an amount (the “Additional Cap Amount”) equal to the amount of Losses previously recovered by Parent under the R&W Insurance Policy related to breaches of the Fundamental Representations; and (2) the total aggregate amount of the liability of the Company Equityholders for Losses with respect to any claims made pursuant to Section 8.2(a)(i) and Section 8.2(a)(iii) (excluding Fundamental Representations) shall be increased by an amount equal to the lesser of (A) the Additional Cap Amount, and (B) that portion of the Indemnity Escrow Amount that was previously used to satisfy Losses for breaches of any Fundamental Representations, and Parent shall be entitled to seek indemnification under this Article 8 for Losses up to such amounts, as applicable, directly from the Company Equityholders. For the avoidance of doubt, this Section 8.4(f) does not increase the survival periods in Section 8.1.
(g) Nothing in this Agreement shall in any way restrict or limit any general obligation at Law of an Indemnified Party to mitigate any Losses which it may suffer or incur by reason of the breach by a Responsible Party of any representation or warranty or the breach of any covenant of the Responsible Party hereunder;
(h) Parent, on behalf of itself and each other Purchaser Indemnitee, further acknowledges and agrees that the provisions of Section 8.4(e) shall apply regardless of whether (i) Parent obtains at or following Closing or maintains following Closing the R&W Insurance Policy, (ii) the R&W Insurance Policy expires, is revoked, cancelled or modified in any manner after issuance, or (iii) any Purchaser Indemnitee makes a claim under the R&W Insurance Policy and such claim is denied by the insurer under such R&W Insurance Policy;
(i) in no event shall any Purchaser Indemnitees be entitled to seek or receive indemnification for the same Loss more than once under this Article VIII even if a claim for indemnification in respect of such Loss has been made as a result of a breach of more than one (1) representation, warranty, covenant or agreement contained in this Agreement;
(j) in no event shall any Purchaser Indemnitee be entitled to indemnification pursuant to this Article VIII with respect to a specific Loss to the extent such Loss is (i) clearly and separately reserved for on the face of the Balance Sheet Date or in the footnotes to any other Financial Statements, (ii) is included in the calculation of the Gross Merger Consideration, including any such Loss that is related to any reserve or other similar item included in such calculation, or (iii) consisting of or relating to Taxes with respect to any taxable period beginning after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period following the Closing Date as a result of any breach of the representations and warranties set forth in Section 3.8; Notwithstanding anything contained herein to the contrary, after the Closing, and except with respect to claims arising from Fraud or breaches of the Fundamental Representations, on the date that the Indemnity Escrow Amount is reduced to zero, the Purchaser Indemnitees shall have no further rights to indemnification from any Person or otherwise under or pursuant to this Agreement. In any case where a Purchaser Indemnitee recovers, under insurance policies or from other collateral sources, any amount, or realizes any Tax Benefit not previously taken into account, in respect of a matter for which such Purchaser Indemnitee was indemnified pursuant to Section 8.2, such Purchaser Indemnitee shall promptly pay over to the Exchange Agent (on behalf of, and for further distribution to, the Company Equityholders) the amount so recovered or realized (after deducting therefrom the amount of the expenses incurred by such Purchaser Indemnitee in procuring such recovery or realization), but not in excess of the sum of (i) any amount previously so paid to or on behalf of such Purchaser Indemnitee in respect of such matter and (ii) any amount expended by the Company Equityholders in pursuing or defending any claim arising out of such matter.
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Limitations on Indemnification Obligations. The rights of the Purchaser Indemnitees to indemnification pursuant to the provisions of Section 9.2(a) are subject to the following limitations:
(a) The the amount of any and all Losses will be determined net of (i) any amounts recovered by the Purchaser Indemnified Parties Indemnitees under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses and (ii) any Tax benefits actually realized with respect to such Losses; provided that Purchaser Indemnitees shall use reasonable efforts to obtain such Tax benefits;
(b) the Purchaser Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 9.2(a) unless such Loss (together with Losses unless and until such time as the Losses in the aggregate for which arising out of any related matter or series of related matters) equals or exceeds $100,000;
(c) the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall Indemnitees will not be entitled to recover all such Losses in pursuant to clause (i) of Section 9.2(a) until the total amount which the Purchaser Indemnitees would recover under clause (i) of Section 9.2(a) (as limited by the provisions of Section 9.4(a) and 9.4(b), but for this Section 9.4(c), exceeds $3,000,000 (the “Threshold”) and then only for the excess of over the Threshold; and
(d) at any time, the Purchaser Indemnitees (x) will be entitled to recover no more than the amount of cash then in the Purchaser Loss Threshold. Except for those Indemnification Escrow Account, (y) pursuant to this Agreement, will not be entitled to recover Losses which arise out of from any source other than the indemnification for Taxes under Article 7 or a breach of the representations Indemnification Escrow Account, and warranties contained in Section 2.1 (Organizationz) shall not be entitled to recover Losses pursuant to clauses (i), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal of Section 9.2(a) if (i) Purchaser had Knowledge at any time on or prior to any net Tax Benefits the Closing Date of the Purchaser Indemnified Parties attributable to such breach of representation, warranty or covenant (other than Section 6.14 (Compensation Approval)), or (ii) Purchaser, after becoming aware of such Loss. The liability , fails to seek to mitigate or prevent such Loss (including, without limitation, seeking indemnification or other redress pursuant to the terms of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against contract to which any Company Stockholder may is a party and by which any Company has the right to seek indemnification from any third party); provided that Purchaser shall only be made pro rata based on precluded from recovering the portion of such Company Stockholder's Pro Rata Portion and limited Loss that Purchaser could have mitigated or prevented had Purchaser sought to so mitigate or prevent. Notwithstanding anything contained herein to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties contrary, after the taxable year of payment of Closing, on the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of date that the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, cash in the Indemnification Escrow AgreementAccount is reduced to zero, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder Purchaser Indemnitees shall have no further rights to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderindemnification under this Article IX.
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Limitations on Indemnification Obligations. The rights to indemnification hereunder are subject to the following limitations:
(a) The amount of any and all Losses shall be (i) net of any amounts recovered by the Indemnified Party under insurance policies (other than any self-insurance programs) or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses (net of expenses, including any deductible and any increase in premium (and retro premium adjustments) for such policies that the Indemnified Party can demonstrate relates directly to such Loss) (provided, that to the extent any such amount is recovered following the making of any indemnification payment hereunder, then a refund equal to the net amount of such recovery, net of reasonable expenses and other costs incurred in obtaining such recovery, will be made within ten (10) days after receipt of such amounts to the applicable indemnitor(s); provided that such refund shall not exceed the amount of the indemnity paid), and (ii) net of an amount equal to any net reduction in cash payments for Taxes actually realized by the Indemnified Party (determined on a “with and without” basis) in the taxable year of the Loss, any prior taxable year (other than a Pre-Closing Tax Period), or the taxable year immediately following the taxable year of the Loss as a result of such Loss. For the avoidance of doubt, for purposes of determining whether Purchaser has actually realized a net reduction in cash payments for Taxes, the parties shall take into account, and give effect to, any net decrease in available amortization deductions, after taking into account both the liability giving rise to a Loss and the treatment of the indemnity payment with respect to a Loss being treated as a reduction of the Purchase Price as provided in Section 9.7 hereof, for all taxable years, including all future taxable years determined on a net present value basis assuming (i) that such deduction would have been fully utilized in each taxable year in which it otherwise would have become available, (ii) a combined federal, state and local income tax rate equal to the marginal rate applicable in the year of the Loss, and (iii) a discount rate equal to the Applicable Rate in effect at the time such net reduction in cash payments for Taxes is actually realized. If any actual net reduction in cash payments for Taxes is realized by an Indemnified Parties Party with respect to any Losses after the Responsible Party made an indemnity payment to the Indemnified Party with respect thereto, then the Indemnified Party shall promptly pay to the Responsible Party the amount (up to the amount of the Responsible Party’s prior payment to the Indemnified Party related thereto) of the net reduction, less, in the case of a net reduction that results in a Tax refund or credit, any out-of-pocket expenses and Taxes incurred in obtaining such Tax refund or credit.
(b) For purposes of determining whether any inaccuracy in, breach of, failure to perform or comply with, or Loss has occurred, or the amount of any such Loss, the representations, warranties, covenants and agreements of the parties set forth in this Agreement will be considered without regard to any materiality or Material Adverse Effect qualification set forth therein.
(c) The following limitations shall apply to Purchaser’s right to indemnity under this ARTICLE IX:
(i) Purchaser Indemnitees will not be entitled to recover for any individual Loss or series of related Losses pursuant to Section 9.2(a)(i) unless and until such time as the Loss or series of related Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed equals or exceeds $250,000 20,000 (the "“Mini Deductible”) in which case Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties Indemnitees shall only be entitled to recover all such Losses in excess of the Mini Deductible in respect of such Loss or series of related Losses, subject to the Deductible and Cap;
(ii) Purchaser Indemnitees will not be entitled to recover Losses pursuant to Section 9.2(a)(i) until the total amount which Purchaser Indemnitees would recover under Section 9.2(a)(i) but for this Section 9.5(c) (but accounting for all other provisions herein), exceeds $700,000 (the “Deductible”), in which case Purchaser Indemnitees shall only be entitled to recover Losses in excess of the Deductible; and
(iii) Purchaser Loss Threshold. Except Indemnitees will not be entitled to recover Losses pursuant to Section 9.2(a)(i), to the extent Seller’s aggregate liability hereunder for those all such Losses which arise out of would otherwise exceed $10,500,000 in the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained aggregate (“Cap”).
(d) The limitations set forth in Section 2.1 (Organization)9.5(c) shall in no way apply to indemnification claims for Losses relating to or otherwise in respect of any Fundamental Representations, any Losses with respect to Taxes described in Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters9.2(a)(ii) or any Losses caused by actual fraudfraud or willful misconduct.
(e) Notwithstanding anything to the contrary in this Agreement, in no event shall the Losses for which the will Purchaser Indemnified Parties are Indemnitees be entitled to be indemnified hereunder exceedrecover Losses in excess of the Enterprise Value, with except Losses relating to or otherwise in respect to of any Company Stockholder, an amount equal to $6.0 million, Fundamental Representations (excluding representations and warranties in Section 3.9 (Taxes) other than Section 3.9(f) (Taxes of Another Person)) or for any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and caused by actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefitwillful misconduct.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(df) Notwithstanding anything to the contrary contained herein, no party shall be liable to or otherwise responsible to any other party hereto or any Affiliate of any other party hereto for special or punitive damages or consequential damages (which may include, if applicable in a particular case, diminution in value damages based upon a multiple of earnings; provided, however, that no presumption should be made that diminution in value damages based upon a multiple of earnings is the appropriate measure of damages), except in the Indemnification Escrow Agreementcase of: (i) a party’s obligation to indemnify an Indemnified Party for amounts paid to a third party where such damages are awarded pursuant to a Third-Party Claim (or settlement thereof) that is subject to indemnification hereunder; (ii) Losses caused by actual fraud or willful misconduct; or (iii) Losses based upon, the Working Capital Escrow Agreementarising out of, with respect to or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnificationany inaccuracy in, reimbursement or other payment obligation of any typebreach of, any the representations and warranties set forth in Section 3.5; it being understood that nothing in this Section 9.5(f) is intended to limit a party’s liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderresponsibility for direct damages.
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Limitations on Indemnification Obligations. (a) The Seller shall have no obligation to indemnify Purchaser Indemnified Parties Indemnitees with respect to Losses described in Section 7.01(a) until the aggregate amount of all such Losses exceeds $500,000 (such amount, the “Basket”), in which case Seller will be liable for all Losses, subject to the other limitations in this Section 7.05; provided, however, that the Basket shall not be entitled apply to recover for Losses arising from (i) fraud or willful misconduct by Seller or (ii) any breach or inaccuracy of the Tax Representations or the Seller Fundamental Representations.
(b) Seller shall have no obligation to indemnify Purchaser Indemnitees with respect to Losses unless arising under Section 7.01 in excess of twelve and until one-half percent (12.5%) of the Purchase Price received (such time as amount, the “General Cap”); provided, however, that the General Cap shall not apply to Losses arising from (i) fraud or willful misconduct by Seller or (ii) breaches or inaccuracies of the Tax Representations or the Seller Fundamental Representations.
(c) For Losses in connection with claims relating to a breach or inaccuracy of the Tax Representations or the Seller Fundamental Representations, Seller shall have no obligation to indemnify Purchaser Indemnitees with respect to Losses arising under Section 7.01 in excess of thirty-five percent (35%) of the Purchase Price received (such amount, the “Fundamental Representations Cap”); provided, however, that the Fundamental Representations Cap shall not apply to Losses arising from fraud or willful misconduct by Seller.
(d) Purchasers shall have no obligation to indemnify Seller Indemnitees with respect to Losses arising under Section 7.02(a) until the aggregate amount of all Losses arising thereunder exceeds the Basket, in which case Purchasers will be jointly and severally liable for which all Losses, subject to the Purchaser Indemnified Parties are entitled other limitations in this Section 7.05; provided, however, that the Basket shall not apply to be indemnified hereunder, including Losses arising from (i) fraud or willful misconduct by Purchasers or (ii) breaches or inaccuracies of the indemnification for Taxes set forth in Article 7, exceed $250,000 Purchasers Fundamental Representations.
(the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties e) Purchasers shall be entitled have no obligation to recover all such indemnify Seller Indemnitees under Section 7.02 with respect to Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitGeneral Cap.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(df) Notwithstanding anything to the contrary contained hereinin this Agreement, (i) Purchaser Indemnitees’ rights to indemnification with respect to Losses based upon fraud or willful misconduct shall not be subject to the limitations set forth in Sections 7.05(a) and 7.05(b), and (ii) Seller Indemnitee’s rights to indemnification with respect to Losses based upon fraud or willful misconduct shall not be subject to the limitations set forth in Sections 7.05(c) and 7.05(d).
(g) The amount of any Losses for which indemnification is provided under this Article VII shall be net of any Tax benefit actually realized and received by the Indemnified Party (which term shall, for purposes of this paragraph, include the ultimate payer(s) of Taxes in the case of an Indemnified Party that is a branch or a disregarded entity or other pass-through entity for any Tax purpose) as a result of the circumstances giving rise to the Loss (determined on a “with and without” basis by computing the Indemnified Party’s Tax liability with and without taking the Losses and all related Tax consequences into account); provided, that if the Indemnified Party does not actually realize and receive any such reduction in Taxes at the time of such payment or indemnity by the Indemnifying Party, then (i) the Indemnifying Party shall pay the amount of such payment or indemnity without taking into account any such reduction in Taxes and (ii) the Indemnified Party shall remit to the Indemnifying Party the amount of any such reduction in Taxes actually realized and received by such person but only to the extent that such reduction in Taxes is actually realized and received no later than four (4) years after any such payment or indemnity is made. In determining the amount necessary to be subtracted from any payment or indemnity or to be remitted to the Indemnifying Party, as the case may be, in order to accomplish the Indemnification Escrow Agreementforegoing, the Working Capital Escrow Agreement, or the Stockholder Representative AgreementParties hereto agree (i) to treat all Taxes required to be paid by, and all reductions in Tax realized by any Indemnified Party, as if such Indemnified Party were subject to Tax at the actual marginal Tax rates (for both federal and state, as determined on a combined basis) applicable to such Indemnified Party and (ii) to treat any indemnification payments made to the Purchasers pursuant to this Agreement as a reduction to the final Purchase Price, unless either party receives a written opinion, reasonably satisfactory in form and substance to the other party, of a law firm with appropriate experience and expertise to the effect that it is not or is not likely to be permissible to treat such payments in that manner on a Tax Return.
(h) The representations, warranties and covenants of the agreements contemplated hereby Indemnifying Party, and the Indemnified Party’s right to indemnification with respect thereto, shall not be affected or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether deemed waived by reason of indemnificationany investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, reimbursement was or other payment obligation might be inaccurate or by reason of the Indemnified Party’s waiver of any typecondition set forth in Section 6.02 or Section 6.03, any liability in tort, contract or otherwise, shall never exceed as the amount of Common Merger Consideration actually received by such Company Stockholdercase may be.
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Limitations on Indemnification Obligations. (ai) The Purchaser Subject to the other limitations described in this Agreement, none of the Sellers or the Company shall have any obligation to indemnify Buyer Indemnified Parties shall not be entitled to recover for Persons from and against any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled pursuant to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 Section 7(b)(i)(A) (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed other than with respect to a breach of a Fundamental Representation) until Buyer Indemnified Persons have suffered Losses by reason of all such breaches in an aggregate amount that exceeds the Basket, after which point Sellers will be obligated to indemnify Buyer Indemnified Persons from and against the first dollar of such Losses; provided, however, that the Basket shall not apply to Losses resulting from fraud or intentional misrepresentation or Section 7(b)(i)(D) or Section 7(b)(i)(E).
(ii) The aggregate amount of all Losses suffered by Buyer Indemnified Persons for which either the Company Stockholder or the Sellers will be liable pursuant to Section 7(b)(i) shall not exceed the Indemnification Cap; provided, however, that the Indemnification Cap shall not apply to Losses resulting from fraud or intentional misrepresentation, or breaches of Fundamental Representations or Section 7(b)(i)(D) or Section 7(b)(i)(E). Notwithstanding anything herein to the contrary, including the foregoing sentence, other than in the case of fraud or intentional misrepresentation of such Company Stockholder's Seller, no Seller’s aggregate liability for Losses under this Agreement shall exceed such Seller’s Pro Rata Portion Share.
(iii) Notwithstanding anything to the contrary in this Agreement, no Indemnifying Party shall be liable for, and the definition of Losses shall not include any punitive damages (except to the Common Merger Consideration actually received by extent such Company Stockholder. Each damages are awarded to a Governmental Authority or other third party).
(iv) All indemnification payments under this Section 7 in respect of any Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) and any indemnity, contribution or other similar payment which actually received by the Purchaser Indemnified Parties receive from Party in respect of the applicable claim.
(v) The right to indemnification, payment of any third party Losses or other remedy based on such representations, warranties, covenants, obligations and agreements will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not jointrepresentation, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Losswarranty, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefitcovenant, obligation or agreement.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(dvi) Notwithstanding anything to the contrary contained hereinin this Agreement, neither the Company nor any Seller shall have any obligation to indemnify any Buyer Indemnified Party for (i) any Losses to the extent arising as a direct result of the unreasonable exercise by Buyer of Buyer’s rights as set forth in Exhibit F (Actions Requiring Purchaser’s Consent) of the Call Option Agreement or (ii) any Losses to the extent actually resulting in an adjustment to the Agreed Valuation (as defined in the Indemnification Escrow Call Option Agreement), the Working Capital Escrow Agreementif any, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder pursuant to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderCall Option Agreement.
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Limitations on Indemnification Obligations. The rights of the Purchaser Indemnitees to indemnification pursuant to the provisions of Section 7.2 and of the Seller Indemnitees to indemnification pursuant to the provisions of Section 7.3 are subject to the following limitations:
(a) The amount of any and all Damages will be determined [net of any amounts actually recovered by the Indemnitees under insurance policies or similar arrangements with third parties with respect to such Damages (less expenses incurred by such Indemnitee in procuring such recovery, including the costs, if any, resulting from premium adjustments with respect to such insurance policies). If the amount to be netted hereunder from any payment required under Sections 7.2 or 7.3 is determined after payment of any amount otherwise required to be paid to an Indemnitee under this Article 7, the Indemnitee shall repay to the Indemnitors, promptly after such determination, any amount that the Indemnitors would not have had to pay pursuant to this Article 7 had such determination been made at the time of such payment].
(b) The Purchaser Indemnified Parties Indemnitees shall not be entitled to recover for any Losses particular Damages or series of related Damages pursuant to Section 7.2(a)(i) unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
Damages or series of related Damages equals or exceeds [***] dollars (b$[***]), and then for all such Damages from and including the first dollar of any Damages; provided, however, that this Section 7.7(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by not apply in respect of any claim (i) the amount for any breach of any insurance proceeds which of the Company Stockholder Indemnified Parties recover with respect to such Loss; and Seller Fundamental Representations, or (ii) any indemnity, contribution of fraud or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Losswillful Breach.
(c) This Section 6.8 is in no way intended to affect the The maximum aggregate obligation of Purchaser Sellers under Section 7.2(a)(i) and Section 7.2(a)(iv) (with respect to deliver Section 7.2(a)(i)) (except in respect of any claim (i) for any breach of any of the Merger Consideration and Seller Fundamental Representations, or (ii) of fraud or willful Breach) for any Damages in the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementshall not exceed [***].
(d) Notwithstanding anything to In no event, shall the contrary contained herein, total amount of Damages for which Sellers shall be liable under this Article 7 [***] (except in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability respect of any Company Stockholder to the Purchaser and Merger Sub, whether by reason claim of indemnification, reimbursement fraud or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderwillful Breach).
Appears in 1 contract
Samples: Asset Purchase Agreement (PhaseBio Pharmaceuticals Inc)
Limitations on Indemnification Obligations. The rights of the Parent Indemnitees to indemnification pursuant to the provisions of Section 9.2(a) and of the Holder Indemnitees to indemnification pursuant to the provisions of Section 9.2(b) are subject to the following limitations:
(a) The Purchaser Indemnified Parties the amount of any and all Losses shall be determined net of any amounts recovered by the Parent Indemnitees or Holder Indemnitees, as applicable, under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses;
(b) the Parent Indemnitees shall not be entitled to recover for any Losses particular Loss pursuant to Section 9.2(a) unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Loss equals or exceeds $250,000 50,000 (the "Purchaser Loss Threshold"“Parent De Minimis Amount”), at which time ;
(c) the Purchaser Indemnified Parties Parent Indemnitees shall not be entitled to recover all such Losses pursuant to Section 9.2(a)(i) until the total amount which the Parent Indemnitees would recover under Section 9.2(a)(i) (as limited by the provisions of Section 9.4(a), Section 9.4(b) and Section 11.11), but for this Section 9.4(c), exceeds $4,000,000 (the “Parent Threshold”), in which case, the Parent Indemnitees shall only be entitled to recover Losses in excess of such amount;
(d) from and after the amount Closing, the shares in the Indemnity Escrow Account, at any given time, shall be the sole source of the Purchaser Loss Threshold. Except for those recovery with respect to Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations indemnifiable pursuant to Section 9.2(a) and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Parent Indemnitees be entitled to recover more than the amount of the Parent Common Stock and funds in the Indemnity Escrow Account pursuant to Section 9.2(a); provided, however, that this Section 9.4(d) shall not apply to Losses suffered or paid, directly or indirectly, by a Parent Indemnitee as a result of, in connection with, or arising out of any breach of any Fundamental Representation (“Parent Excess Indemnification Losses”) for which the Purchaser Indemnified Parties are Parent Indemnitees shall only be entitled to recover the value of the Stock Consideration, such value determined based on the Twenty Day Average for the date of final resolution of such claim. Each Company stockholder receiving Merger Consideration Shares in the Merger shall be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 millionliable Severally in Proportion, and not jointly, for Parent Excess Indemnification Losses; provided, that no Company stockholders shall be liable for amounts in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion excess of the Common Merger Consideration actually Shares received by such Company Stockholder. Each Loss stockholder; provided, further, that the Parent Indemnitees shall first make a claim for which Losses against the Purchaser Indemnified Parties are entitled to be indemnified hereunder Indemnity Escrow Account and the Indemnity Escrow Account shall be reduced by (i) exhausted before any claims for Losses are made directly against the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits Company stockholders. “Severally in Proportion” means several liability for a percentage of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not jointParent Excess Indemnification Losses, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Lossif any, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification ’s Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.Percentage;
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Limitations on Indemnification Obligations. The indemnification obligations under this Agreement are subject to the following limitations:
(a) The No claims for indemnification may be made by the Purchaser Indemnified Parties shall not be entitled to recover for any Losses Indemnitees against the Vendor under Sections 11.1(a) or 11.1(c) unless and until such time as the Losses in the aggregate amount of Losses for which the Purchaser Indemnified Parties Indemnitees are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 under Sections 11.1(a) and 11.1(c) exceeds (the "Purchaser Loss Threshold"Redacted: dollar amount), at in which time event the Purchaser Indemnified Parties shall be entitled to recover accumulated aggregate amount of all such Losses in excess of such amount may be recovered by the Purchaser.
(b) No claims for indemnification may be made by the Vendor Indemnitees against the Purchaser under Section 11.2(a) unless the aggregate accumulated amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the all such Losses for which the Purchaser Indemnified Parties Vendor Indemnitees are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 Section 11.2(a) exceeds (OrganizationRedacted: dollar amount), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of in which event the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the accumulated aggregate amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to all Losses in excess of such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall may be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized recovered by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such LossVendor.
(c) This Section 6.8 is in no way intended to affect the obligation The maximum aggregate liability of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementa party for Losses hereunder shall not exceed (Redacted: sensitive information).
(d) Notwithstanding anything The sole recourse of the Purchaser Indemnitees for indemnification pursuant to Section 11.1 will be the right to set-off any such Losses to which it is entitled against any unpaid portion of the Purchase Price, including the right to set-off such amount against the Cash Payment referred to in Section 3.2(a)(ii) and/or the issuance of any Shares. In no event will the Purchaser be entitled to make any claim against the Vendor to recover the Cash Payment or any Shares already issued to the contrary contained herein, in Vendor. For purposes of calculating the Indemnification Escrow Agreementnumber of Shares to be withheld from issuance pursuant to this Section 11.3(d), the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any value of the agreements contemplated hereby or therebyShares, determined in accordance with Section 3.1, shall be used.
(e) The Purchaser may, subject to approval of the TSX-V and all applicable Securities Laws, issue additional common shares in its capital in satisfaction of the Vendor Indemnitees indemnification rights pursuant to Section 11.2. For purposes of calculating the number of shares to be issued pursuant to this Section 11.3(e), the maximum aggregate liability value of any Company Stockholder to the Purchaser and Merger SubShares, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability determined in tort, contract or otherwiseaccordance with Section 3.1, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderbe used.
Appears in 1 contract
Samples: Asset Purchase Agreement
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Merger Stockholders shall not be entitled liable to recover indemnify the Parent Indemnitees for any Losses unless breaches of representations and warranties pursuant to Sections 10.2(a)(i) (except for claims with respect to Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.15, 3.17, 3.29 and 3.31 and the closing certificate in Section 6.1 insofar as it relates to such representations and warranties (the representation and warranties contained in such sections and certificate being the “Stockholder Fundamental Representations”)) until such time as the Losses in the aggregate Damages incurred by the Parent Indemnitees for which the Purchaser Indemnified Parties are entitled to indemnification may be indemnified hereunder, including the indemnification sought but for Taxes set forth in Article 7, exceed this sentence exceeds $250,000 460,000 (the "Purchaser Loss Threshold"“Basket Amount”), at which time point the Purchaser Indemnified Parties Parent Indemnitees shall only be entitled to recover all such Losses in excess of seek indemnification for the amount of by which such Damages exceed the Purchaser Loss ThresholdBasket Amount. Except The Stockholder Indemnitees may not make any claim for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach breaches of representations and warranties pursuant to Section 10.3(i) (except for claims with respect to Sections 4.1 and 4.2, and the closing certificate in Section 7.1 insofar as they relate to such representations and warranties (the representations and warranties contained in Section 2.1 (Organizationsuch sections and certificate being the “Parent Fundamental Representations”), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall until the Losses aggregate Damages incurred by the Stockholder Indemnitees for which indemnification may be sought but for this sentence exceeds the Purchaser Indemnified Parties are Basket Amount, at which point the Stockholder Indemnitees shall only be entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the seek indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds by which such Damages exceed the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitBasket Amount.
(b) Each Loss The aggregate indemnification obligation of the Merger Stockholders for which breaches of representations and warranties pursuant to Section 10.2(a)(i) hereof shall not exceed $6,900,000 (the Company “Cap Amount”); provided, that this limitation shall not apply to breaches of the Stockholder Indemnified Parties are entitled Fundamental Representations. The aggregate indemnification obligation of the Merger Stockholders for breaches of the Stockholder Fundamental Representations, claims made pursuant to be indemnified hereunder Section 9.2 and claims made pursuant to Section 10.2(a)(ii) through Section 10.2(a)(xiv) shall be reduced not exceed $10,000,000; provided that this limitation shall not apply to claims for indemnification made by (iParent pursuant to Section 10.2(a)(xi) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Losshereof.
(c) This The aggregate indemnification obligations of Parent and the Guarantor for breaches of representations and warranties pursuant to Section 6.8 is in no way intended 10.3(i) shall not exceed the Cap Amount, provided that this limitation shall not apply to affect breaches of the Parent Fundamental Representations. The aggregate indemnification obligation of Purchaser to deliver the Merger Consideration Parent and the aggregate amount Guarantor for breaches of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this AgreementParent Fundamental Representations and claims made pursuant to Section 10.3(ii) and Section 10.3(iii) shall not exceed $10,000,000.
(d) Notwithstanding anything After the Effective Time, Parent shall seek recovery with respect to claims for indemnification pursuant to Section 9.2 and Section 10.2(a) against the Indemnity Escrow Funds (to the contrary contained herein, in extent available) before seeking recovery directly from the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderStockholders.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties Notwithstanding anything in this Agreement to the contrary, no indemnification claims for Damages shall be asserted by the Seller Indemnitees pursuant to Section 9.1(a)(i) or the Buyer Indemnitees pursuant to Section 9.1(b)(i) unless any individual Damages or group or series of related Damages exceeds $100,000 (such individual Damages or group or series of related Damages that does not exceed $100,000, the “DeMinimis Damages”); provided, that the foregoing clause (a) shall not apply to Damages arising out of or relating to the inaccuracy or breach of any representation or warranty in the event of fraud, willful misconduct or intentional misrepresentation.
(A) The Seller shall not have any obligation to indemnify any Buyer Indemnitee pursuant to Section 9.1(b)(i) unless and until the aggregate amount of all such individual Damages incurred or sustained by all Buyer Indemnitees with respect to which the Buyer Indemnitees would otherwise be entitled to recover indemnification under Section 9.1(b)(i) (which shall not include for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed purposes DeMinimis Damages) exceeds $250,000 2,100,000 (the "Purchaser Loss Threshold"“Deductible”), at which time whereupon the Purchaser Indemnified Parties Seller shall be entitled to recover liable for all such Losses Damages in excess of the amount Deductible, and (B) the aggregate liability of the Purchaser Loss Threshold. Except Seller to indemnify (or to cause to be indemnified) the Buyer Indemnitees for those Losses which arise Damages under Section 9.1(b)(i) shall in no event exceed $10,500,000 (the “Cap”); provided, that the foregoing clause (b) shall not apply to Damages arising out of or relating to the indemnification for Taxes under Article 7 inaccuracy or a breach of any representation or warranty to the representations extent of knowing and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, willful misconduct or intentional misrepresentation with respect thereto.
(A) The Buyer shall not have any obligation to indemnify (or to cause to be indemnified) any Seller Indemnitees pursuant to Section 9.1(a)(i) unless and until the aggregate amount of all individual Damages incurred or sustained by all Seller Indemnitees with respect to which the Seller Indemnitees are entitled to indemnification under Section 9.1(a)(i) (which shall not include for such purposes all DeMinimis Damages) exceeds the Deductible, whereupon the Buyer shall be liable for the full amount of all Damages from the first dollar thereof, and (B) the aggregate liability of the Buyer to indemnify (or to cause to be indemnified) the Seller Indemnitees for Damages under Section 9.1(a)(i) shall in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, exceed an amount equal to $6.0 millionthe Cap; provided, and in any event Losses with respect to that the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
foregoing clause (c) This Section 6.8 is in no way intended shall not apply to affect the obligation Damages arising out of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything or relating to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, inaccuracy or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability breach of any Company Stockholder representation or warranty to the Purchaser extent of knowing and Merger Subactual fraud, whether by reason of indemnification, reimbursement willful misconduct or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderintentional misrepresentation with respect thereto.
Appears in 1 contract
Samples: Purchase Agreement (Fifth & Pacific Companies, Inc.)
Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 8.2(a) are subject to the following limitations:
(a) The Purchaser Indemnified Parties the amount of any and all Losses will be determined net of any amounts actually recovered by Buyer Indemnitees under insurance policies with respect to such Losses; provided that if, following the payment of any indemnification amounts pursuant to Section 8.2(a), Parent, Surviving Corporation or any of their respective Affiliates recover any amounts under insurance policies with respect to such Losses, then the applicable Buyer Indemnitees shall reimburse the Company Securityholders of such prior indemnification payments in the amount of such insurance recoveries;
(b) the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.2(a) unless such Loss equals or exceeds $5,000; provided that (i) if a transaction or occurrence involving the same parties produces or results in (A) a number of separate Losses unless and until of a similar nature, or (B) a succession of similar Losses over a number of accounting periods, or (ii) a transaction or occurrence involving multiple parties produces or results in Losses by various parties of a similar nature, then such time as the separate Losses in the aggregate for which the Purchaser Indemnified Parties are entitled will be deemed to be indemnified hereunder, including aggregated for purposes of satisfying the indemnification for Taxes $5,000 threshold set forth in Article 7, exceed $250,000 this Section 8.4(b);
(c) the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall Buyer Indemnitees will not be entitled to recover all such Losses pursuant to clauses (i), (iv) and (v) of Section 8.2(a) until the total amount which the Buyer Indemnitees would recover under clauses (i), (iv) and (v) of Section 8.2(a) (as limited by the provisions of Sections 8.4(a) and 8.4(b)), but for this Section 8.4(c), exceeds the Threshold Amount, and then only for the excess over the Threshold Amount; provided that the limitations set forth in excess this Section 8.4(c) shall not apply to Losses relating to breaches of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 3.25 or Section 3.26;
(Organizationd) at any time the Buyer Indemnitees (x) will be entitled to recover no more than the amount of cash then in the Escrow Account and (y) pursuant to this Agreement, will not be entitled to recover Losses from any source other than the Escrow Account;
(e) the Seller Indemnitees will not be entitled to recover Losses pursuant to Section 8.2(b)(i), (X) until the total amount which the Sellers Indemnitees would recover under clause (i) of Section 2.2 (Subsidiaries8.2(b), but for this Section 2.4 (Execution and Delivery8.4(e), Section 2.6 (Capitalization)exceeds the Threshold and then only for the excess over the Threshold, and Section 2.16 (Tax MattersY) or actual fraud, in excess of $6,000,000 in the aggregate.
(f) no event Indemnified Party shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified have any right of indemnification hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 investigation or with respect remediation of Hazardous Substances that have been released, disposed or discharged on any real property currently owned or operated by the Company or any of its Subsidiaries except to breaches the extent that such action is required by applicable Environmental Laws, lawfully required by a relevant Governmental Authority or where concentrations of Sections 2.1 Hazardous Substances exceed the applicable action levels in the jurisdiction in which the property is located. Any such investigation or remedial action shall be conducted in a reasonable, cost effective manner (Organizationtaking into account the requirements of Environmental Law and the relevant Governmental Authority), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion assuming continued commercial or industrial use of the Common Merger Consideration actually received by subject property and employing risk based standards or institutional controls where available, provided that such controls and standards will not interfere with the continued commercial or industrial use of the property and further provided that the Company Stockholderor its Subsidiary has the legal right to accept such controls in connection with the subject property. Each Loss for which Notwithstanding anything contained herein to the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) contrary, absent fraud, after the Closing, on the date that the amount of any insurance proceeds which cash in the Purchaser Indemnified Parties recover with respect Escrow Account is reduced to such Loss; (ii) any indemnityzero, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect Buyer Indemnitees shall have no further rights to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages indemnification under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitArticle VIII.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Agreement and Plan of Reorganization (Russell Corp)
Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees and the Seller Indemnitees to indemnification pursuant to the provisions of Section 9.2 are subject to the following limitations:
(a) The Purchaser Indemnified Parties the Buyer Indemnitees shall not be entitled to recover for any Losses unless and until such time as the pursuant to Section 9.2(a)(i) (other than Losses in respect of inaccuracies or breaches of the aggregate for Fundamental Representations and Warranties and Losses in respect of the Reserved Matters) until the total amount of Losses which the Purchaser Indemnified Parties are Buyer Indemnitees would recover under Section 9.2(a)(i), but for this Section 9.4(a), exceeds three million dollars $3,000,000, in which case, the Buyer Indemnitees shall only be entitled to recover Losses in excess of such amount;
(b) the Seller Indemnitees shall not be indemnified hereunder, including entitled to recover Losses pursuant to Section 9.2(b)(i) (other than Losses in respect of inaccuracies or breaches of the indemnification for Taxes representations and warranties of Buyer set forth in Article 7, exceed $250,000 (Section 5.2(b) and Section 5.12) until the "Purchaser Loss Threshold"total amount of Losses which the Seller Indemnitees would recover under Section 9.2(b)(i), at but for this Section 9.4(b), exceeds three million dollars $3,000,000, in which time case, the Purchaser Seller Indemnitees shall only be entitled to recover Losses in excess of such amount;
(c) no Indemnified Parties Party shall be entitled to recover all for any particular Loss (including any series of related Losses) pursuant to Section 9.2(a)(i) or Section 9.2(b)(i) unless such Loss (including any series of related Losses) equals or exceeds $50,000;
(d) except in the case of fraud or with respect to Losses indemnifiable pursuant to Section 9.2(a)(iv), the maximum liability of Seller and the Seller Related Parties with respect to Losses indemnifiable pursuant to Section 9.2(a) (other than Section 9.2(a)(iv)) and Section 10.18 (i) with respect to Losses for which Buyer Indemnitees assert a claim for indemnification hereunder prior to the Survival Date shall be an amount equal to the Escrow Amount less the Seller Excess Adjustment and (ii) with respect to Losses for which Buyer Indemnitees do not assert a claim for indemnification hereunder prior to the Survival Date, shall be an amount equal to the lesser of (A) five million dollars ($5,000,000) and (B) that portion of the Escrow Amount in excess of the amount Seller Excess Adjustment not paid to Buyer or any Buyer Indemnitee in respect of claims for indemnification pursuant to Section 9.2(a) or Section 10.18 asserted prior to the Purchaser Loss Threshold. Except for those Losses which arise out of Survival Date (the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization“Extended Survival Cap”), Section 2.2 (Subsidiaries)and, Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraudin each case, in no event shall the Buyer Indemnitees be entitled to collect in excess of such amount with respect to such Losses;
(e) except in the case of fraud, the maximum liability of Buyer and the Buyer Related Parties with respect to Losses indemnifiable pursuant to Section 9.2(b)(i) with respect to Losses for which Seller Indemnitees assert a claim for indemnification hereunder prior to the Purchaser Indemnified Parties are entitled to Survival Date shall be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, the Escrow Amount less the Buyer Excess Adjustment and in any event Losses (ii) with respect to Losses for which Seller Indemnitees do not assert a claim for indemnification hereunder prior to the Survival Date, shall be an amount equal to the lesser of (A) five million dollars ($5,000,000) and (B) that portion of the Escrow Amount in excess of the Buyer Excess Adjustment not paid to Seller or any Seller Indemnitee in respect of claims for indemnification for Taxes under Article 7 pursuant to Section 9.2(b)(i) or Section 10.18 asserted prior to the Survival Date, and, in each case, in no event shall the Seller Indemnitees be entitled to collect in excess of such amount with respect to breaches such Losses;
(f) solely for purposes of Sections 2.1 (Organization)determining the amount of Losses subject to indemnification hereunder, 2.2 (Subsidiaries)but not for purposes of determining if an actual breach of an representation, 2.4 (Execution warranty, covenant or other agreement has occurred and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect given rise to a claim for indemnification hereunder, any express qualifications or limitations set forth in such representation, warranty, covenant or other agreement as to materiality or “Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder Material Adverse Effect” (or other similar materiality qualifier) contained therein, shall be reduced by disregarded;
(ig) the amount of any and all Losses required to be paid to any Indemnified Party pursuant to this Article 9 will be reduced to the extent of any amounts such Indemnified Party actually receives (net of any costs of recovery) pursuant to the terms of any insurance proceeds which policies covering such Losses;
(h) the Purchaser Indemnified Parties recover Buyer Indemnitees shall not be entitled to indemnification pursuant to Section 9.2(a) for any Loss to the extent that (i) a reserve was recorded with specificity in the Latest Balance Sheet in respect to of such Loss; Loss or (ii) any indemnity, contribution or other similar payment which such Loss was reflected as a liability in the Purchaser Indemnified Parties receive from any third party with respect Closing Working Capital amount used to such Loss; and (iii) an amount equal determine the Final Purchase Price pursuant to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.Section 2.4(d);
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the indemnification obligations hereunder of any Indemnifying Party shall be subject to any duty to mitigate on the part of the Indemnified Party to the extent required by applicable Law;
(j) in any case where an Indemnified Party recovers, under insurance policies or from other sources of recovery, any amount in respect of a matter for which such Indemnified Party was indemnified pursuant to Section 9.2, such Indemnified Party shall promptly pay over to the applicable Indemnifying Party the amount so recovered (after deducting therefrom the amount of the expenses incurred by such Indemnified Party in procuring such recovery), but not in excess of the sum of (i) any insurance proceeds which amount previously so paid by the Company Stockholder Indemnifying Party to or on behalf of such Indemnified Parties recover with Party in respect to of such Loss; matter and (ii) any indemnity, contribution amount expended by the applicable Indemnifying Party in pursuing or other similar payment which the Company Stockholder Indemnified Parties receive from defending any third party with respect to claim arising out of such Lossmatter.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Walter Investment Management Corp)
Limitations on Indemnification Obligations. Notwithstanding anything herein to the contrary, the rights of the Indemnified Parties to indemnification pursuant to the provisions of this Article X are subject to the following limitations:
(a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of any and all Losses shall be determined net of (i) any amounts actually recovered by any Indemnified Party under any insurance policies from other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses (net of the Purchaser cost of recovery and increases in insurance premiums) and (ii) any cash Tax benefits actually realized by the Indemnified Parties (or their direct or indirect beneficial owners) in the year of such Loss Threshold. Except for those Losses which arise or the next succeeding taxable year that are attributable to any deduction, loss, credit or other Tax benefit resulting from or arising out of the such Loss;
(b) an Indemnified Party’s right to make a claim for indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 hereunder shall expire on March 31, 2020;
(Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersc) or actual fraud, in no event shall the Losses for which Indemnifying Parties have any obligation to indemnify the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an Losses incurred under this Article X until the total amount equal to $6.0 million, and in any event of Losses with respect the Indemnified Parties would recover pursuant to the indemnification for Taxes under Article 7 terms hereof equals or with respect exceeds $500,000, at which point, the Seller will be obligated to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of indemnify the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) for the entire amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.indemnifiable Losses;
(d) Notwithstanding anything to in no event shall the contrary contained hereinIndemnifying Parties’ aggregate liability for Losses arising under this ARTICLE X exceed $49.1 million; provided that in no event shall the Indemnifying Parties’ aggregate liability under Section 10.01(ii) exceed $3,737,605; and
(e) in no event shall the Indemnifying Parties be liable for any consequential, in the Indemnification Escrow Agreementindirect, the Working Capital Escrow Agreementspecial, exemplary, punitive, incidental or enhanced damages, or other similar types of damages, including, but not limited to, damages for lost profits, lost revenues, lost business or diminution in value, regardless of whether such damages were foreseeable and the Stockholder Representative Agreementlegal or equitable theory (contract, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract tort or otherwise) upon which the claim was made; provided that the limitation in this Section 10.03(e) shall not apply to any such damages that are payable to a third party by an Indemnified Party as determined by a court of competent jurisdiction in a final, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholdernon-appealable judgment.
Appears in 1 contract
Samples: Merger Agreement (Platinum Eagle Acquisition Corp.)
Limitations on Indemnification Obligations. (a6.8.1 Notwithstanding Section 6.3, there shall be no liability for indemnification under Section 6.3(a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed amount of Losses under this Agreement exceeds One Hundred Thousand Dollars ($250,000 100,000) (the "Purchaser Loss “Indemnification Threshold"”), at which time the Purchaser Seller and the Equity Holder will be obligated to indemnify the Buyer Indemnified Parties shall be entitled with respect to recover all such Losses in excess of the Indemnification Threshold; provided that the Indemnification Threshold shall not apply to the misrepresentation, breach or inaccuracy of any Fundamental and Statutory Representation.
6.8.2 Notwithstanding Section 6.4, there shall be no liability for indemnification under Section 6.4(a) unless the aggregate amount of Losses thereunder exceeds the Purchaser Loss Indemnification Threshold. Except for those Losses , at which arise out of time Buyer will be obligated to indemnify the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Seller Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and all Losses in any event Losses with respect excess of the Indemnification Threshold; provided that the Indemnification Threshold shall not apply to the misrepresentation, breach or inaccuracy of Section 3.1.
6.8.3 The indemnification obligations under Section 6.3(a) shall be limited to One Million Dollars ($1,000,000) (the “Cap”), provided, however, that the Cap shall not apply to indemnification obligations under Section 6.3(a) for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization)any Fundamental and Statutory Representation.
6.8.4 The indemnification obligations under Section 6.4(a) shall be limited to the Cap, 2.2 (Subsidiaries)provided, 2.4 (Execution and Delivery)however, 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud that the Cap shall not exceed with respect apply to a Company Stockholder such Company Stockholder's Pro Rata Portion indemnification obligations for breaches of Section 3.1.
6.8.5 The amount of Losses recoverable by the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder Party under this Article 6 shall be reduced reduced, on a dollar-for-dollar basis, by (ia) the amount of any insurance proceeds which received by the Purchaser Indemnified Parties recover Party in connection with respect to such Loss; (ii) a claim under this Article 6 under any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; insurance policies and (iiib) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which Tax benefit realized by the Company Stockholder Indemnified Parties recover Party or its Affiliates with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such LossLosses.
(c) This Section 6.8 is 6.8.6 AFTER THE CLOSING, THE RIGHTS SET FORTH IN THIS ARTICLE 6, WILL, EXCEPT FOR FRAUD OR EQUITABLE RELIEF, BE THE EXCLUSIVE REMEDY OF THE BUYER INDEMNIFIED PARTIES OR THE SELLER INDEMNIFIED PARTIES WITH RESPECT TO ANY BREACH OR INACCURACY OF ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS OR OBLIGATIONS CONTAINED IN THIS AGREEMENT.
6.8.7 Notwithstanding any other provision in no way intended this Agreement to affect the obligation of Purchaser contrary or provided for under applicable Law, neither the Seller nor the Equity Holder nor any other Seller Indemnified Party shall in any event be liable to deliver the Merger Consideration Buyer or any other Buyer Indemnified Party, and neither the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with Buyer nor any other Buyer Indemnified Party shall have the terms right to recover for or be indemnified against, any special, consequential, incidental or punitive damages relating to the breach or alleged breach of this Agreement, whether or not the possibility of such damages has been disclosed to the other Party in advance or could have been reasonably foreseen by such other Party; provided, however, that any such damages suffered or incurred by any Buyer Indemnified Party to a third party shall not be subject to the limitation set forth in this Section 6.8.7.
6.8.8 Each Party shall take, and shall cause all Buyer Indemnified Parties and Seller Indemnified Parties, as applicable, to take, all commercially reasonable efforts (ddetermined without regard to any indemnification rights of such Person hereunder) Notwithstanding anything to mitigate all Losses that are indemnifiable or recoverable hereunder or in connection herewith. If such Buyer Indemnified Party or Seller Indemnified Party, as applicable, mitigates his, her or its Loss after payment under any indemnification provision of this Agreement in respect of such Loss has been made, the Buyer or the Seller, as applicable, shall immediately notify the other of such mitigation and shall pay to the contrary contained herein, in applicable Person the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any extent of the agreements contemplated hereby or thereby, value of the maximum aggregate liability benefit of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by that mitigation within five (5) business days after such Company Stockholderbenefit is received.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights of the Indemnified Parties to indemnification pursuant to the provisions of this Article IX are subject to the following limitations:
(a) The Purchaser With respect to each indemnification obligation in this Article IX: (i) the amount of any Loss will be determined on an After-Tax Basis, (ii) all Losses shall be net of any Eligible Insurance Proceeds that have already been paid at the time the amount of such Losses are determined and (iii) in no event shall a Responsible Party have liability to the Indemnified Parties shall not be entitled to recover Party for any Losses unless consequential, special, indirect or punitive damages, lost profits, diminution in value or similar items, except if and until to the extent any such time as damages are recovered against an Indemnified Party pursuant to a Third Party Claim.
(b) None of the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all for any particular Loss pursuant to Sections 9.2(a), Section 9.2(b) (in respect of a breach of Section 5.6 as it relates to the failure to disclose any inaccuracy of any representation or warranty) or 9.3(a) unless such Loss (or series of related Losses) equals or exceeds $50,000 (each, a “Qualifying Loss”); provided, however, that this limitation shall not apply to Losses in respect of claims for breaches of any Fundamental Representation; provided, further that in respect of any inaccuracy of any representation or warranty disclosed after the date of this Agreement pursuant to Section 5.6 with respect to which (i) the material facts, events or conditions, as applicable, which caused such inaccuracy first occurred after the date of this Agreement (or in the case of Litigation, a notice is first received by the Company or any of its Subsidiaries after the date of this Agreement) and (ii) the Company first had Knowledge after the date of this Agreement, only a Loss (or series of related Losses) with respect to such supplementally disclosed matters in excess of $500,000 shall be deemed to be a Qualifying Loss.
(c) None of the Parent Indemnified Parties or the Seller Indemnified Parties shall be entitled to recover Qualifying Losses pursuant to Sections 9.2(a) or 9.3(a) (as applicable) until the total amount of Qualifying Losses which the Parent Indemnified Parties or Seller Indemnified Parties, respectively, would recover under Sections 9.2(a), Section 9.2(b) (in respect of a breach of Section 5.6 as it relates to the failure to disclose any inaccuracy of any representation or warranty) or 9.3(a), but for this Section 9.5(c), exceeds $19,312,500 (the “Deductible”), whereupon the Parent Indemnified Parties and the Seller Indemnified Parties, respectively, shall be entitled to indemnification only for such Qualifying Losses in excess of the amount Deductible; provided, however, that the Deductible shall not apply to Losses in respect of claims for breach of any Fundamental Representation.
(d) Notwithstanding anything contained herein to the Purchaser Loss Threshold. Except for those Losses which arise out contrary, nothing in this Section 9.5 shall limit any Person’s rights to recovery in respect of the indemnification for Taxes under fraud.
(e) For all purposes of this Article 7 IX, any inaccuracy or a breach of the representations and warranties contained in this Agreement (other than the Company’s representations and warranties in the fourth sentence of Section 2.1 3.5 the first sentence of Section 3.6 (Organizationa), Section 2.2 (Subsidiaries3.7(a), the first sentence of Section 2.4 (Execution 3.8, and DeliverySections 3.9(a) and 3.14), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) shall be determined without reference to the terms “material,” “materially,” “Material Adverse Effect,” “material adverse effect” or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled other similar qualifications as to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and materiality contained or incorporated directly or indirectly in any event Losses with respect to the indemnification for Taxes under Article 7 such representation or with respect to breaches warranty.
(f) For purposes of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) determining the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect Losses subject to such Loss; (ii) any indemnityindemnification under Section 9.2, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitLosses will be determined net of all liabilities that are specifically accrued for the matter subject to indemnification and reflected in the Final Working Capital.
(bg) Each Loss If any portion of Losses to be reimbursed by the Responsible Party is determined to be covered, in whole or in part, by Third Party Insurance coverage of the Company as of the date hereof and any D&O “tail” coverage pursuant to Section 5.10, the Indemnified Party shall promptly give notice thereof to the Responsible Party (a “Notice of Insurance”). If the Responsible Party so requests within one hundred eighty (180) calendar days after receipt of a Notice of Insurance, the Indemnified Party shall use its commercially reasonable efforts to collect the maximum amount of insurance proceeds thereunder, in which event all such proceeds actually received, net of costs reasonably incurred by the Indemnified Party in seeking such collection, shall be considered “Eligible Insurance Proceeds”. Any amount payable by a Responsible Party pursuant to this Article IX shall be paid promptly and payment shall not be delayed pending any determination of Eligible Insurance Proceeds. In any case where an Indemnified Party recovers from a third Person any Eligible Insurance Proceeds and/or any other amount in respect of any Losses for which a Responsible Party has actually reimbursed such Indemnified Party pursuant to this Article IX, such Indemnified Party shall promptly pay over to the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced Responsible Party such Eligible Insurance Proceeds and/or the amount so recovered (after deducting therefrom the amount of expenses incurred by it in procuring such recovery), but not in excess of the sum of (i) any amount previously paid by the amount Responsible Party to or on behalf of any insurance proceeds which the Company Stockholder Indemnified Parties recover with Party in respect to of such Loss; claim and (ii) any indemnity, contribution amount expended by the Responsible Party in pursuing or other similar payment which the Company Stockholder Indemnified Parties receive from defending any third party with respect to claim arising out of such Lossmatter.
(ch) This Section 6.8 is in no way intended Any Indemnified Party shall take all commercially reasonable steps to affect the obligation mitigate any Losses incurred by such party upon and after becoming aware of Purchaser any event or condition that would reasonably be expected to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreementgive rise to any indemnification rights hereunder.
(di) Notwithstanding anything If the Indemnified Party receives any payment from a Responsible Party in respect of any Losses pursuant to Sections 9.2 or 9.3 and the contrary contained herein, in Indemnified Party could have recovered all or a part of such Losses from a third party (a “Potential Contributor”) based on the Indemnification Escrow Agreementunderlying claim asserted against the Responsible Party, the Working Capital Escrow Agreement, or Indemnified Party shall assign such of its rights to proceed against the Stockholder Representative Agreement, and in any of Potential Contributor as are necessary to permit the agreements contemplated hereby or thereby, Responsible Party to recover from the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed Potential Contributor the amount of Common Merger Consideration actually received by such Company Stockholderpayment.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled rights of the Parent Indemnitees to recover for any Losses unless and until such time as indemnification pursuant to the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"provisions of Section 8.2(a), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, other than with respect to any Company Stockholderfraud, an amount equal to $6.0 million, and in any event Losses with respect are subject to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 following limitations:
(Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (ia) the amount of any claim for indemnification by any Parent Indemnitee pursuant to this Article VIII shall be reduced to reflect any insurance proceeds which recoverable by and paid to any Parent Indemnitee (other than the Purchaser Indemnified Parties recover proceeds paid under the R&W Policy) and by any tax benefits actually realized by any Parent Indemnitee with respect to the matter giving rise to such Lossclaim (net of reasonable out-of-pocket expenses for collection in the case of insurance proceeds); provided that in no event shall any indemnification payment be delayed in anticipation of the receipt of any such insurance proceeds or tax benefits. Parent shall, and shall cause its Affiliates (iiincluding the Surviving Corporation, following the Effective Time) any indemnityto, contribution in good faith, diligently seek recovery, at its or other similar payment which the Purchaser Indemnified Parties receive their own expense, of all insurance proceeds from any third party insurers with respect to such Loss; and (iii) an amount equal all Losses with respect to which any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder Parent Indemnitee makes a claim for damages indemnification under this Agreement Article VIII (other than claims under the R&W Policy); provided that nothing in this sentence shall be several require Parent or its Affiliates (including the Surviving Corporation, following the Effective Time) to seek recovery of insurance proceeds prior to pursuing indemnification pursuant to this Article VIII (other than insurance proceeds from the R&W Policy as provided in Section 8.5 below). To the extent that Parent or any of its Affiliates (including the Surviving Corporation and not jointthe Company’s Subsidiaries, following the Effective Time) receives any amount under insurance coverage or realizes any tax benefit with respect to a matter for which it has previously received payment in indemnification pursuant to this Article VIII, Parent shall, as soon as reasonably practicable after the receipt of such insurance proceeds or realization of such tax benefit, pay and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited reimburse to the Common Merger Consideration actually received by Escrow Agent (if such Company Stockholder. If a Tax Benefit attributable reimbursement is to a Loss be delivered prior to the Escrow Release Date) or to the Member Representative (if such reimbursement is realized by the Purchaser Indemnified Parties to be delivered after the taxable year of Escrow Release Date), for any prior indemnification payment of the Loss, Purchaser shall pay (up to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefitinsurance proceeds or tax benefit, less any retroactive premium adjustments directly attributable thereto, and net of out-of-pocket expenses for collection).
(b) Each Loss notwithstanding anything contained herein to the contrary, for which purposes of determining whether there has been a breach and the Company Stockholder Indemnified Parties amount of any Losses that are entitled to be indemnified hereunder the subject matter of a claim for indemnification, each representation and warranty in this Agreement shall be reduced by read without regard and without giving effect to the term “material” or “Material Adverse Effect” or any similar phrase which has the effect of making such representation and warranty less restrictive (as if any such word or phrase were deleted from such representation and warranty), other than (i) the amount use of any insurance proceeds which the Company Stockholder Indemnified Parties recover word “Material” in the definitions of Material Contract, Material Lease, Material Customers and Material Suppliers, (ii) the failure list items on the Disclosure Schedules because of materiality qualifications to the disclosure, and (iii) the use the word “material” in Section 3.5 with respect to such Loss; Financial Statements and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.in Section 10.2;
(c) This Section 6.8 is in no way intended event shall Loss include any consequential, indirect, lost profits, punitive and exemplary damages (other than to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being extent consequential, indirect, punitive or exemplary damages are paid by Purchaser at Closing in accordance with the terms of this Agreement.a Third Party Claim);
(d) Notwithstanding in no event shall (i) the Company Securityholders be required to provide indemnification to any of the Parent Indemnitees with respect to any claim for indemnification made pursuant to Section 8.2(a)(i): (A) if the Losses associated with such claim (or group of related claims arising out of the same or similar circumstances) are less than Ten Thousand Dollars ($10,000) (the “De Minimis Claim Amount”); or (B) unless and until the Losses associated with all claims for indemnification made pursuant to Section 8.2(a)(i) incurred by the Parent Indemnitees aggregate at least One Million Five Hundred Fifty-Two Thousand Five Hundred Dollars ($1,552,500) (the “Deductible”), after which point the Company Securityholders shall only be required to provide indemnification with respect to indemnifiable Losses with respect to any such claim for indemnification made pursuant to Section 8.2(a)(i) in excess of the Deductible (for the avoidance of doubt, Losses associated with any claim for which indemnification is unavailable hereunder solely by reason of the limitation described in foregoing clause (i)(A) will not be counted towards determining if the Deductible has been reached); provided, however, that, notwithstanding anything to the contrary contained herein, in the Indemnification Escrow AgreementDe Minimis Claim Amount and the Deductible shall not apply to any indemnification claims made with respect to the Fundamental Representations, the Working Capital Escrow Agreementindemnification claims made pursuant to Sections 8.2(a)(ii) or (iii), or any claim based on fraud; (ii) the Stockholder Representative Agreement, and Company Securityholders be required to provide indemnification to the Parent Indemnitees for indemnifiable Losses arising from claims for indemnification made pursuant to Section 8.2(a)(i) in any an aggregate amount in excess of the agreements contemplated hereby Escrow Funds except with respect to claims made with respect to the Fundamental Representations or thereby, the maximum aggregate liability of any claim based on fraud; and (iii) any Company Stockholder Securityholder be required to provide indemnification to the Purchaser and Merger Sub, whether by reason Parent Indemnitees for indemnifiable Losses with respect to Section 8.2(a) in an aggregate amount in excess of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by the Company Securityholder;
(e) notwithstanding anything to the contrary contained in this Agreement: (i) the Member Representative’s and Company Securityholders’ shall not be entitled to seek indemnification pursuant to Section 8.2(b)(i) with respect to breaches of representations and warranties, other than a claim for breach of Fundamental Representations, or a claim for failure to pay the full Merger Consideration or a claim for rescission of the transactions contemplated hereby, until the amount of all Losses exceeds the Deductible, in which case the Member Representative and the Company Securityholders shall be entitled to seek indemnification only for the amount of such excess, up to the Indemnification Cap and subject to any other applicable limits on indemnification; and
(f) in the event that any facts or circumstances arise resulting in any Losses, each of the Parent Indemnitees and the Member Indemnitees shall have a duty and an obligation to take commercially reasonable and timely actions to mitigate the amount of all such Losses. Each of Parent and the Company StockholderSecurityholders shall take such actions or cause such actions to be taken as are or may become necessary so as to mitigate, to the extent required by the preceding sentence, all Losses for which they may seek indemnification hereunder.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees and the Seller Indemnitees to indemnification pursuant to the provisions of Section 7.2 are subject to the following limitations:
(a) The Purchaser Indemnified Parties the Buyer Indemnitees shall not be entitled to recover for any particular Loss (including any series of related Losses) pursuant to Section 7.2(a)(i) (other than Losses arising from (x) Fraud or (y) breach of any of the Fundamental Representations or the representations and warranties in Section 3.15) unless such Loss (including any series of related Losses) equals or exceeds $10,000;
(b) the Seller Parties shall not be obligated to indemnify the Buyer Indemnitees for any Losses arising under Section 7.2(a)(i) (other than Losses arising from (x) Fraud or (y) breach of any of the Fundamental Representations or the representations and warranties in Section 3.15) until the Buyer Indemnitees shall have suffered such time as the Losses in the an aggregate for which the Purchaser Indemnified Parties are entitled amount equal to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 220,000 (the "Purchaser Loss Threshold"“Basket Amount”), at after which time point the Purchaser Indemnified Seller Parties shall be entitled obligated to recover all indemnify each Buyer Indemnitee solely from and against the aggregate amount of such Losses in excess of the amount Basket Amount;
(c) the maximum liability of the Purchaser Loss Threshold. Except for those Losses which arise Seller Parties (inclusive of any amounts paid out of from the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax MattersIndemnity Escrow Amount) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to Losses indemnifiable pursuant to Section 7.2(a)(i) shall be the Indemnity Cap, other than in the case of (i) Fraud or (ii) any Company Stockholderbreach of any of the Fundamental Representations, an amount equal to $6.0 million, and in which case such maximum liability of the Seller Parties shall be the Purchase Price actually received by the Seller;
(d) the maximum liability of the Seller Parties (inclusive of any event Losses amounts paid out from the Indemnity Escrow Amount) with respect to the indemnification for Taxes under Article 7 or with respect Losses indemnifiable pursuant to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (CapitalizationSection 7.2(a) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by the Purchase Price;
(ie) the amount of any and all Losses shall be determined net of any amounts actually recovered by the Buyer Indemnitees under insurance proceeds policies (excluding the R&W Insurance Policy) or from other collateral sources (such as contractual indemnities of any Person which the Purchaser Indemnified Parties recover are contained outside of this Agreement) with respect to such LossLosses; and
(f) the Buyer Indemnitees shall not be entitled to indemnification pursuant to Section 7.2(a) for any Loss to the extent that (i) such Loss was taken into account in the determination of the Final Purchase Price pursuant to Section 2.4(d), (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to any such Loss; Losses that the Buyer Indemnitees pursue directly against Seller Parties, the Buyer Indemnitees have failed to first exhaust and use their commercially reasonable efforts to recover all such Losses from the Indemnity Escrow Amount or (iii) an amount equal with respect to any net Tax Benefits such Losses that the Buyer Indemnitees pursue directly against Seller Parties in excess of the Purchaser Indemnified Parties attributable Indemnity Cap with respect to such Loss. The liability Losses arising out of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized Section 7.2(a)(i) which are covered by the Purchaser Indemnified Parties after R&W Insurance Policy, the taxable year of payment of Buyer Indemnitees have failed to use commercially reasonable efforts to recover all such Losses under the LossR&W Insurance Policy.
(g) In any case where a Buyer Indemnitee recovers, Purchaser shall pay to each Company Stockholder an under insurance policies (excluding the R&W Insurance Policy) or from other collateral sources, any amount in cash equal respect of a matter for which such Buyer Indemnitee was indemnified pursuant to Section 7.2(a), such stockholder's Pro Rata Portion of Buyer Indemnitee shall promptly pay over to Seller the amount so recovered (after deducting therefrom the amount of the expenses incurred by such Tax Benefit.
(b) Each Loss for which Buyer Indemnitee in procuring such recovery), but not in excess of the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by sum of (i) the any amount previously so paid by Seller to or on behalf of any insurance proceeds which the Company Stockholder Indemnified Parties recover with such Buyer Indemnitee in respect to of such Loss; matter and (ii) any indemnityamount expended by Seller in pursuing or defending any claim arising out of such matter.
(h) For purposes of this Article 7, contribution in determining whether there has been any inaccuracy or breach of any representation or warranty (other than any Fundamental Representation) set forth in this Agreement or in any document, certificate or other instrument delivered in connection herewith and the resulting determination of Losses arising therefrom, each reference to any materiality, Company Material Adverse Effect, or similar payment which the Company Stockholder Indemnified Parties receive from qualification contained in or otherwise applicable to any third party such representation or warranty shall be disregarded; provided, however, that this Section 7.4(h) shall not be applied solely with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, determining whether there has been any inaccuracy or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability breach of any Company Stockholder to Unscraped Representation (but, for the Purchaser and Merger Sub, whether by reason avoidance of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwisedoubt, shall never exceed the amount still be applied with respect to determination of Common Merger Consideration actually received by such Company StockholderLosses arising therefrom).
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Exela Technologies, Inc.)
Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 8.2(a) are subject to the following limitations:
(a) the amount of any and all Losses will be determined net of (i) any accruals or reserves included in the calculation of Net Working Capital or proposed by Parent in the calculation of Net Working Capital but not included in the final determination of Net Working Capital and (ii) any amounts recovered by the Buyer Indemnitees under indemnification agreements or arrangements with third parties or under insurance policies with respect to such Losses (and no right of subrogation shall accrue to any such third party indemnitor or insurer hereunder) (each such source named in this clause (ii) a “Collateral Source”). The Purchaser amount of any losses shall be reduced on account of any Tax savings or benefits actually realized by the Buyer Indemnitees that is attributable to any deduction, loss, credit or other Tax benefit resulting from or arising out of such Losses and shall be increased on account of the Tax cost (if any) to the Buyer Indemnitee(s) of the receipt of any payment for indemnification (for this purpose, the Buyer Indemnitee(s) shall be deemed to actually realize a Tax benefit or a Tax cost with respect to a taxable year if, and to the extent that, the Buyer Indemnitee(s)’ liability for Taxes for such taxable year, calculated by excluding any Tax items attributable to the Losses or the receipt of payments for indemnification from all taxable years, exceeds or is exceeded by the Buyer Indemnitee(s)’ actual cumulative liability for Taxes for such taxable year, calculated by taking into account any Tax items attributable to the Losses or the receipt of payments for indemnification for all taxable years);
(b) The Buyer Indemnitees shall use commercially reasonable efforts to obtain recovery from any Collateral Source for such claim. If the amount to be netted hereunder from any payment required under Sections 8.2(a) or 8.2(b) is determined after payment of any amount otherwise required to be paid to an Indemnified Party under this Article VIII, the Indemnified Party shall repay to the Responsible Parties, promptly after such determination, any amount that the Responsible Parties would not have had to pay pursuant to this Article VIII had such determination been made at the time of such payment;
(c) No claim for indemnity for a breach of a particular representation or warranty shall be made by the Buyer Indemnitees under Section 8.2(a), if Parent had Knowledge prior to the execution and delivery of this Agreement of the breach of such representation or warranty. No claim for indemnity for a breach of a particular representation or warranty shall be made by the Seller Indemnitees under Section 8.2(b), if the Company had Knowledge prior to the execution and delivery of this Agreement of the breach of such representation or warranty. The Buyer Indemnified Parties shall not have a right to assert claims under any provision of this Agreement for any Losses to the extent that such Losses relate to actions taken by or omitted to be taken by Parent or the Surviving Corporation after the Closing Date. Nothing provided in this Section 8.2(c) shall limit any duty of an Indemnified Party to mitigate Losses under applicable law;
(d) the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.2(a) unless such Loss (together with Losses unless and until such time as arising out of any related matter or series of related matters) equals or exceeds $100,000;
(e) the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall Buyer Indemnitees will not be entitled to recover all such Losses in pursuant to clause (i) of Section 8.2(a) until the total amount which the Buyer Indemnitees would recover under clause (i) of Section 8.2(a) (as limited by the provisions of Sections 8.4(a) and 8.4(b)), but for this Section 8.4(c), exceeds $5,000,000 (the “Threshold”) and then only for the excess of over the Threshold; and
(f) at any time the Buyer Indemnitees (x) will be entitled to recover no more than the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, then in the Indemnification Escrow AgreementAccount and (y) will not be entitled to recover Losses from the Former Holders, directly or indirectly, from any source other than the Working Capital Indemnification Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder Account. Notwithstanding anything contained herein to the Purchaser and Merger Subcontrary, whether by reason of indemnificationafter the Closing, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed on the date that the amount of Common Merger Consideration actually received by such Company Stockholdercash in the Indemnification Escrow Account is reduced to zero, the Buyer Indemnitees shall have no further rights to indemnification under this Article VIII.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled Notwithstanding anything in this Agreement to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereundercontrary, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, except with respect to claims under Section 11.1(a)(i) or Section 11.1(b)(i) for the failure of any Company StockholderFundamental Representations made by Seller or Buyer to be true and correct, an amount equal to no indemnification claims for Damages shall be asserted by the Seller Indemnitees or the Buyer Indemnitees, respectively, under Section 11.1(a)(i) or Section 11.1(b)(i) unless any individual Damages or group or series of related Damages exceeds $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 25,000 (such individual Damages or with respect to breaches group or series of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall related Damages that does not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of $25,000, the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit“DeMinimis Damages”).
(b) Each Loss Except with respect to claims under Section 11.1(b)(i) for which the Company Stockholder Indemnified Parties are entitled failure of any Fundamental Representations made by Seller to be indemnified hereunder shall be reduced by true and correct, (i) the Seller shall not have any obligation to indemnify any Buyer Indemnitee pursuant to Section 11.1(b)(i) unless and until the aggregate amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover all such individual Damages incurred or sustained by all Buyer Indemnitees with respect to which the Buyer Indemnitees would otherwise be entitled to indemnification under Section 11.1(b)(i) (which shall not include for such Loss; purposes DeMinimis Damages) exceeds $2,250,000 (the “Deductible”), whereupon the Seller shall be liable for all Damages in excess of the Deductible, and (ii) the aggregate liability of the Seller to indemnify (or to cause to be indemnified) the Buyer Indemnitees for Damages under Section 11.1(b)(i) shall in no event exceed $22,500,000 (the “Cap”). Notwithstanding anything to the contrary herein, the maximum amount payable by the Seller to all Buyer Indemnitees for Damages pursuant to Section 11.1(b) and Section 11.8 shall not exceed the sum of (A) the portion of the Purchase Price paid to the Seller pursuant to the Stock Purchase that is not funded by the Seller Debt Financing plus (B) the principal amount and any indemnity, contribution or other similar payment which interest thereon paid by the Company Stockholder Indemnified Parties receive from any third party with respect Buyer to such Lossthe Seller pursuant to the Seller Debt Financing.
(c) This Except with respect to claims under Section 6.8 is in no way intended 11.1(a)(i) for the failure of any Fundamental Representations made by Buyer to affect be true and correct, (i) the Buyer shall not have any obligation of Purchaser to deliver the Merger Consideration indemnify (or to cause to be indemnified) any Seller Indemnitees pursuant to Section 11.1(a)(i) unless and until the aggregate amount of Credit Agreement Debt being paid all individual Damages incurred or sustained by Purchaser at Closing all Seller Indemnitees with respect to which the Seller Indemnitees are entitled to indemnification under Section 11.1(a)(i) (which shall not include for such purposes DeMinimis Damages) exceeds the Deductible, whereupon the Buyer shall be liable for all Damages in accordance with excess of the terms Deductible, and (ii) the aggregate liability of this Agreement.
the Buyer to indemnify (dor to cause to be indemnified) the Seller Indemnitees for Damages under Section 11.1(a)(i) shall in no event exceed an amount equal to the Cap. Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability amount payable by Buyer to all Seller Indemnitees for Damages pursuant to this Agreement shall not exceed the sum of any Company Stockholder (A) the portion of the Purchase Price paid to the Purchaser Seller pursuant to the Stock Purchase that is not funded by the Seller Debt Financing plus (B) the principal amount and Merger Sub, whether any interest thereon paid by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderBuyer to the Seller pursuant to the Seller Debt Financing.
Appears in 1 contract
Samples: Stock Purchase Agreement (Fifth & Pacific Companies, Inc.)
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled Seller’s and the Shareholders’ obligation to recover for any Losses unless and until such time as the Losses in the aggregate for which make indemnification payments to the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including on account of Indemnifiable Losses claimed under Section 9.1(a) shall not arise until the indemnification for Taxes set forth in Article 7, exceed aggregate amount of all Indemnifiable Losses claimed under Section 9.1(a) exceeds One Hundred Thousand Dollars ($250,000 100,000) (the "“Threshold Amount”). Once the aggregate amount of Indemnifiable Losses claimed by the Purchaser Loss Threshold")Indemnified Parties under Section 9.1(a) exceeds the Threshold Amount, at which time the Purchaser Indemnified Parties shall then be entitled to recover all such Indemnifiable Losses, except those Indemnifiable Losses in excess that were used to reach the Threshold Amount. The foregoing Threshold Amount limitation shall not apply to, and the determination of whether the amount of the Purchaser Loss Threshold. Except for those Threshold Amount has been reached shall not include, any Indemnifiable Losses which arise out of the indemnification for Taxes under Article 7 or (i) relate to a breach by the Seller and the Shareholders of any of the representations and warranties contained in any of Section 2.1 (Organization)3.6, Section 2.2 (Subsidiaries)3.9, Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), 3.20 and Section 2.16 (Tax Matters) 3.26, or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive arise from any third party misrepresentation or breach of warranty made fraudulently or with respect intent to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefitdefraud or mislead or recklessly or with gross negligence.
(b) Each Loss for which The Purchaser’s obligation to make indemnification payments to the Company Stockholder Seller Indemnified Parties are on account of Indemnifiable Losses claimed under Section 9.2(a) shall not arise until the aggregate amount of all Indemnifiable Losses claimed under Section 9.2(a) exceeds the Threshold Amount. Once the aggregate amount of Indemnifiable Losses claimed by the Seller Indemnified Parties as a result of the events and circumstances described in Section 9.2(a) exceeds the Threshold Amount, then the Seller Indemnified Parties shall then be entitled to be indemnified hereunder recover all such Indemnifiable Losses, except those Indemnifiable Losses that were used to reach the Threshold Amount. The foregoing Threshold Amount limitation shall be reduced by (i) not apply to, and the amount determination of whether the Threshold Amount has been reached shall not include, any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive Indemnifiable Losses arising from any third party misrepresentation or breach of warranty made fraudulently or with respect intent to such Lossdefraud or mislead or recklessly or with gross negligence.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration The Seller’s and the Shareholders’ aggregate obligation to make indemnification payments to the Purchaser Indemnified Parties on account of Indemnifiable Losses claimed under Section 9.1(a) shall not exceed an amount equal to Four Million Five Hundred Thousand Dollars ($4,500,000) (the “Cap”). The foregoing Cap limitation shall not apply to, and the determination of Credit Agreement Debt being paid whether the Cap has been reached shall not include, any Indemnifiable Losses which (i) relate to a breach by Purchaser at Closing the Seller and the Shareholders of any of the representations and warranties contained in accordance any of Section 3.6, Section 3.9, Section 3.20 and Section 3.26 or (ii) arise from any misrepresentation or breach of warranty made fraudulently or with intent to defraud or mislead or recklessly or with gross negligence. In addition, the terms foregoing Cap limitation shall not apply to, and the determination of this Agreementwhether the Cap has been reached shall not include, any Indemnifiable Losses which are due under Section 9.3 and satisfied by a payment from the Escrow Amount.
(d) Notwithstanding anything The Purchaser’s aggregate obligation to make indemnification payments to the contrary contained herein, in Seller Indemnified Parties on account of Indemnifiable Losses claimed under Section 9.2(a) shall not exceed an amount equal to the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative AgreementCap. The foregoing Cap limitation shall not apply to, and in any the determination of whether the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any typeThreshold Amount has been reached shall not include, any liability in tort, contract Indemnifiable Losses arising from any misrepresentation or otherwise, shall never exceed the amount breach of Common Merger Consideration actually received by such Company Stockholderwarranty made fraudulently or with intent to defraud or mislead or recklessly or with gross negligence.
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Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 7.2 are subject to the following limitations:
(a) The Purchaser Indemnified Parties Buyer Indemnitees shall not be entitled to recover that portion of any Losses to the extent such Losses are specifically reflected or reserved for as a current liability in the calculation of Net Working Capital, as finally determined in accordance with Section 2.7;
(b) The Buyer Indemnitees’ sole recourse for any claims or Losses pursuant to Section 7.2(a)(i) or Section 7.2(a)(ii) (with respect to Section 7.2(a)(ii), other than any Fundamental Payout Amount, but only to the extent of such Fundamental Payout Amount as set forth in Section 7.2(a)(ii)) is the R&W Insurance Policy except for claims or Losses pursuant to Section 7.2(a)(i) which are (x) in an aggregate amount up to the Retention Amount or (y) after the R&W Insurance Policy has been exhausted.
(c) The Buyer Indemnitees shall not be entitled to recover for any Losses unless and until such time as the Losses that in the aggregate exceed the Indemnification Cap. In no event shall any Stockholder or holder of a Transaction Incentive Award be required to indemnify the Buyer Indemnitees for which any Losses that in the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, aggregate exceed $250,000 such Person's pro rata share (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of based on the amount of proceeds received by such Person in relation to the Purchaser Loss Threshold. Except for those Losses which arise out proceeds received by all Former Holders and holders of Transaction Incentive Awards) of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization)Indemnification Cap; provided, Section 2.2 (Subsidiaries)however, Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceedthat, with respect to any Company Stockholdera holder of a Transaction Incentive Award who is not a Former Holder of Series A Preferred Stock, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud such holder shall not be required to indemnify the Buyer Indemnitees for any Losses that exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually amount received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited holder pursuant to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitTransaction Incentive Award.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Limitations on Indemnification Obligations. (a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, the rights of the Indemnitees to any payment with respect to any indemnification pursuant to Section 9.2 are subject to the following limitations:
(a) the amount of any and all Losses pursuant to Section 9.2(a) or Section 9.2(b) shall be determined net of (i) any amounts actually recovered by the Indemnitees under insurance policies or other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses, in each case calculated net of reasonable out-of-pocket costs and expenses and premium increases incurred in connection with such recoveries and (ii) any reduction in cash Taxes paid by the Indemnitees for the taxable period in which such Loss occurs or the immediately succeeding two (2) taxable years as a result of any deduction attributable to such Loss;
(b) except in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), or Fraud, the Purchaser Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(a)(i) until the total amount which such Purchaser Indemnitee would recover under Section 9.2(a)(i) (as limited by the provisions of Sections 9.4(a) and 10.18), but for this Section 9.4(b), exceeds $175,000 (the “Deductible Amount”) in which case such Purchaser Indemnitee shall only be entitled to recover Losses in excess of such amount, subject to the other limitations herein;
(c) except in connection with breaches of Purchaser Fundamental Representations or Fraud, the Seller Indemnitees shall not be entitled to recover Losses pursuant to Section 9.2(b)(i) until the total amount which such Seller Indemnitee would recover under Section 9.2(b)(i) (as limited by the provisions of Sections 9.4(a) and 10.18), but for this Section 9.4(c), exceeds the Deductible Amount, in which case such Seller Indemnitee shall only be entitled to recover Losses in excess of such amount, subject to the other limitations herein;
(d) except in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), or Fraud, cancellation of Purchaser Common Shares with a value of $175,000 pursuant to Section 9.6(a)(i) shall be the sole source of recovery for any claims made by Purchaser Indemnitees for Losses pursuant to Section 9.2(a)(i) and in no event, except in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), or Fraud, shall the Purchaser Indemnitees be entitled to recover more than $175,000 in the Indemnification Escrow Agreementaggregate through cancellation of Purchaser Common Shares pursuant to Section 9.2(a)(i) and Section 9.6(a)(i);
(e) in connection with breaches of Company Fundamental Representations, the Working Capital Escrow Agreementrepresentations and warranties set forth in Section 3.15 (Tax Matters), breaches of covenants, or Fraud, the Stockholder Purchaser Indemnitees shall not be entitled to recover Losses in excess of an amount that is equal to the Purchase Price;
(f) in no event shall any Indemnitee be entitled to seek or receive indemnification for the same Loss more than once under this Article 9 even if a claim for indemnification in respect of such Loss has been made as a result of a breach of more than one representation, warranty, covenant or agreement contained in this Agreement;
(g) in no event shall any Purchaser Indemnitee be entitled to indemnification pursuant to this Article 9 with respect to a specific Loss to the extent such Loss is (i) expressly reserved for on the Latest Balance Sheet or the audited balance sheet of the Company as of June 30, 2019; provided that to the extent such Loss exceeds the amount of such express reservation, such Purchaser Indemnitee shall be entitled to indemnification pursuant to this Article 9 for the amount of such excess or (ii) is included in the calculation of the Purchase Price, as finally determined in accordance with Section 2.3, including any such Loss that is related to any reserve or other similar item included in such calculation;
(h) for purposes of this Article 9, if any representation or warranty contained herein is qualified by materiality, “Company Material Adverse Effect,” “material adverse effect” or a derivative thereof, such qualification will be ignored and deemed not included in such representation or warranty for purposes of (i) determining whether such representation or warranty has been breached, was misrepresented or is inaccurate and (ii) calculating the amount of Losses with respect to such breach, misrepresentation or inaccuracy;
(i) except in connection with breaches of Company Fundamental Representations, the representations and warranties set forth in Section 3.15 (Tax Matters), or Fraud, after the Closing, after the first to occur of (A) the date on which Purchaser Indemnitees shall have received $175,000 in the aggregate in value pursuant to Section 9.6(a)(i) or (B) the 18-month anniversary of the Closing Date, the Purchaser Indemnitees shall have no further rights to indemnification from any Person under Section 9.2(a)(i) or otherwise under or pursuant to this Agreement;
(j) in any case where a Purchaser Indemnitee actually recovers, under insurance policies or from other collateral sources, or realizes any Tax benefit required to reduce the amount of indemnifiable Losses pursuant to Section 9.4(a) and that not previously taken into account pursuant thereto, any amount in respect of a matter for which such Purchaser Indemnitee was indemnified pursuant to Section 9.2(a), such Purchaser Indemnitee shall, subsequent to the receipt of such recovery promptly pay over to the Sellers’ Representative Agreement(for the benefit of the Sellers) the amount so recovered or realized (after deducting therefrom the amount of the reasonable out-of-pocket costs and expenses and premium increases incurred by such Purchaser Indemnitee in procuring such recovery or realization), but not in excess of the sum of (i) any amount previously so paid to or on behalf of such Purchaser Indemnitee in respect of such matter and (ii) any amount expended by the Sellers in pursuing or defending any claim arising out of such matter; and
(k) notwithstanding anything to the contrary herein, (i) the Purchaser Indemnitees’ sole remedy for Losses with respect to breaches of any of the agreements contemplated hereby representations set forth in Section 3.15 (other than Section 3.15(a), (k) and (l)) shall not include Taxes for any taxable period (or therebyportion thereof) beginning after the Closing Date or any Losses attributable thereto, the maximum aggregate liability of any Company Stockholder to and (ii) the Purchaser and Merger Sub, whether by reason Indemnitees shall not be entitled to any indemnification for Losses with respect to Taxes resulting from any transactions occurring on the Closing Date after the Closing outside the ordinary course of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderbusiness.
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Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees and the Seller Indemnitees to indemnification pursuant to the provisions of Section 11.2 are subject to the following limitations:
(a) The Purchaser Indemnified Parties Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 11.2(a)(i) or Section 11.2(a)(ii)(A) until the total amount of Losses which the Buyer Indemnitees would recover under Section 11.2(a)(i) and Section 11.2(a)(ii)(A), but for this Section 11.4(a), exceeds two million dollars ($2,000,000) (the “Basket Amount”), in which case, the Buyer Indemnitees shall be entitled to recover Losses (including all Losses comprising the Basket Amount), except that claims related to any breach or inaccuracy in the Seller Fundamental Representations and Warranties shall not be subject to the Basket Amount.
(b) The Seller Indemnitees shall not be entitled to recover Losses pursuant to Section 11.2(b)(i) or Section 11.2(b)(ii)(A) until the total amount of Losses which the Seller Indemnitees would recover under Section 11.2(b)(i) and Section 11.2(b)(ii)(A) but for this Section 11.4(b), exceeds the Basket Amount, in which case, the Seller Indemnitees shall only be entitled to recover Losses (including all Losses comprising the Basket Amount), except that claims related to any breach or inaccuracy in the Buyer Fundamental Representations and Warranties shall not be subject to the Basket Amount.
(c) The Buyer Indemnitees shall not be entitled to recover for any Losses particular Loss (including any series of related Losses) pursuant to Section 11.2(a)(i) or Section 11.2(a)(ii)(A) unless and until such time as Loss (including any series of related Losses) equals or exceeds $25,000 (the Losses “De Minimis Threshold”) nor shall any Loss that does not meet the De Minimis Threshold be considered in determining whether the Basket Amount has been met; provided, however, that claims related to any breach or inaccuracy in the aggregate for which the Purchaser Indemnified Parties are entitled to Seller Fundamental Representations and Warranties shall not be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect subject to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this AgreementDe Minimis Threshold.
(d) Notwithstanding anything The Seller Indemnitees shall not be entitled to recover for any particular Loss (including any series of related Losses) pursuant to Section 11.2(b)(i) or Section 11.2(b)(ii)(A) unless such Loss (including any series of related Losses) equals or exceeds the De Minimis Threshold nor shall any Loss that does not meet the De Minimis Threshold be considered in determining whether the Basket Amount has been met; provided, however, that claims related to any breach or inaccuracy in the Buyer Fundamental Representations and Warranties shall not be subject to the contrary contained hereinDe Minimis Threshold.
(e) Subject to the last paragraph of Section 11.2(a), Xxxxxx Xxxxxxx, Parent and Seller shall have no liability under this Agreement to any Buyer Indemnitee for Losses in respect of Loss Sharing Claims other than pursuant to Section 11.2(a)(iii).
(f) Other than Losses arising out of fraud or any breach or inaccuracy in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, Seller Fundamental Representations and in any of the agreements contemplated hereby or therebyWarranties, the maximum aggregate liability of Xxxxxx Xxxxxxx, Parent and Seller with respect to Losses indemnifiable pursuant to Section 11.2(a)(i) and Section 11.2(a)(ii)(A) shall be $5,928,700.
(g) Other than Losses arising out of fraud or any Company Stockholder breach or inaccuracy in the Buyer Fundamental Representations and Warranties, the maximum aggregate liability of Buyer with respect to Losses indemnifiable pursuant to Sections 11.2(b)(i) and Section 11.2(b)(ii)(A) shall be $5,928,700.
(h) The amount of any and all Losses shall be determined net of (i) any amounts actually recovered by the Indemnified Party under insurance policies or from other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses and (ii) any Tax benefits actually received with respect to such Losses.
(i) The Buyer Indemnitees shall not be entitled to indemnification pursuant to Section 11.2(a) for any Loss to the Purchaser extent that (i) such Loss was taken into account in the determination of the Final Purchase Price pursuant to Section 2.5(d) or (ii) the Buyer Indemnitees failed to mitigate or prevent such Loss as required by Law.
(j) The Buyer Indemnitees and Merger Subthe Seller Indemnitees, whether by reason in each case, shall not be entitled to recover or make a claim for any amounts in respect of indemnificationconsequential, reimbursement incidental, special or indirect damages, lost profits or punitive damages and, in particular, no “multiple of profits” or “multiple of cash flow” or other payment obligation of any type, any liability similar valuation methodology based upon multiples shall be used in tort, contract or otherwise, shall never exceed calculating the amount of Common Merger Consideration actually received any Losses, except to the extent such damages are recovered by third parties in connection with claims made by such third parties that are indemnified under this Agreement.
(k) In any case where a Indemnified Party recovers, under insurance policies or from other collateral sources, any amount in respect of a matter for which such Indemnified Party was indemnified pursuant to Section 11.2(a) or Section 11.2(b), as applicable, such Indemnified Party shall promptly pay over to the Responsible Party the amount so recovered (after deducting therefrom the amount of the expenses incurred by such Indemnified Party in procuring such recovery), but not in excess of the sum of (i) any amount previously so paid by the Responsible Party to or on behalf of such Indemnified Party in respect of such matter and (ii) any amount expended by the Responsible Party in pursuing or defending any claim arising out of such matter.
(l) In the event the Closing occurs and Seller or Parent (either before or after Closing) has made (or is required to make) any payment to any Buyer Indemnitee in satisfaction of all or some of its indemnification obligation hereunder, in no event shall Seller or Parent (or any of their Affiliates) or any Seller Indemnitee be entitled to seek indemnification or contribution (or any similar theory) from the Company Stockholderor its Subsidiaries (including any of officers, directors, employees, agents, shareholders and Affiliates of the Company or its Subsidiaries) in respect of any such payments made (or required to be made) by Seller or Parent (or any of their Affiliates).
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Limitations on Indemnification Obligations. (a) The rights of the Purchaser Indemnitees and Seller Indemnities, as applicable, to indemnification pursuant to the provisions of Section 6.2 are subject to the following limitations:
(i) An Indemnified Parties Party shall not be entitled to recover for any Losses Loss pursuant to Section 6.2 unless and until the aggregate amount of all Losses, which the Indemnified Party would have been entitled to recover under Section 6.2 but for this Section 6.5(a), exceeds the amount of twenty percent (20%) of the Purchase Price, and then only for such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 excess of such amount (the "“Threshold”). Notwithstanding the foregoing, Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover any and all Losses related to Warranty Liabilities without regard to the Threshold, and all such Losses Claims shall be paid in excess of full.
(ii) In no event shall an Indemnified Party be entitled to recover more than the amount of the Purchaser Loss Threshold. Except for those Losses which arise out forty percent (40%) of the indemnification for Taxes under Article 7 Purchase Price, except in the case of fraud or willful misconduct by a breach of particular indemnitor hereunder. Notwithstanding the representations foregoing, Purchaser shall be entitled to recover any and warranties contained in Section 2.1 all Losses related to Warranty Liabilities, which Losses shall be excluded from the foregoing 40% threshold.
(Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersb) or actual fraud, in no event shall the The aggregate Losses for which the Purchaser Indemnified Parties are Indemnitees or the Seller Indemnitees shall be entitled to seek and obtain indemnification pursuant to Section 6.2 shall not include (i) amounts paid or required to be indemnified hereunder exceed, paid to any third party as punitive damages or exemplary damages or (ii) any consequential damages incurred or suffered by the Indemnified Party. The parties hereby agree that no Losses incurred by an Indemnified Party shall be deemed or treated for purposes of this Section 6.5(b) as consequential damages to the extent that such Losses (x) are incurred by the Indemnified Party in connection with a Claim asserted by a third party against the Indemnified Party with respect to any Company Stockholder, an amount equal to $6.0 million, and matter for which there has been a breach by the other Party of any representation or warranty made in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled Party and (y) consist solely of amounts paid or required to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect paid to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party in connection with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.Claim
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in upon any of the agreements contemplated hereby or thereby, the maximum aggregate liability Indemnified Party’s becoming aware of any Company Stockholder Claim as to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received which indemnification may be sought by such Company StockholderIndemnified Party pursuant to this Article 6, such Indemnified Party shall utilize all reasonable efforts, consistent with normal practices and policies and good commercial practice, to mitigate such Losses.
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Limitations on Indemnification Obligations. (a) The Other than with respect to Losses related to Taxes (which shall be governed exclusively by the provisions of Section 7.2), the rights of the Purchaser Indemnified Parties Indemnitees to indemnification pursuant to the provisions of Section 10.2(a) are subject to the following limitations:
(i) the Purchaser Indemnitees shall not be entitled to recover Losses for any Losses unless and claims made with respect to breaches of the Non-Fundamental Representations pursuant to Section 10.2(a)(i) until such time as the Losses in the aggregate for total amount which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Indemnitees would recover under Section 10.2(a)(i) exceeds $250,000 5,000,000 (the "Purchaser Loss Threshold"“Deductible”), at in which time case the Purchaser Indemnified Parties Indemnitees shall be entitled to recover the aggregate amount of all such Losses in excess of the amount of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Deductible;
(ii) subject to Section 2.1 (Organization10.5(a)(iii), at any given time the Escrow Amount shall be the sole source of recovery with respect to Losses for claims made with respect to Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization10.2(a), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are Indemnitees be entitled to be indemnified hereunder exceed, recover more than the Escrow Amount with respect to any Company Stockholdersuch Losses; and
(iii) notwithstanding Section 10.5(a)(ii), an amount equal to $6.0 millionuntil midnight New York time on the 180th day following the Closing (the “180th Day”), the Escrow Amount and in any event Losses the Stock Consideration shall be the sole source of recovery with respect to the indemnification Losses for Taxes under Article 7 or claims made with respect to breaches of Sections 2.1 (Organizationthe Fundamental Representations pursuant to Section 10.2(a)(i) or for claims made pursuant to Section 10.2(a)(iv) or Section 10.2(a)(v), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud in no event shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are Indemnitees be entitled to be indemnified hereunder shall be reduced by recover more than the Escrow Amount plus the Stock Consideration (ivalued at the Current Parent Market Price) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not jointLosses, and any assertion of claims made after the 180th Day for such Losses against any Company Stockholder may only shall be made pro rata based on such Company Stockholder's Pro Rata Portion and limited subject to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount limitations in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitSection 10.5(a)(ii).
(b) Each Loss for which The rights of the Company Stockholder Indemnified Parties Seller Indemnitees to indemnification pursuant to the provisions of Section 10.2(b) are entitled subject to be indemnified hereunder shall be reduced by the following limitations:
(i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties Seller Indemnitees shall not be entitled to recover Losses for claims made with respect to such Loss; and (iibreaches of the Non-Fundamental Representations pursuant to Section 10.2(b)(i) any indemnity, contribution or other similar payment until the total amount which the Company Stockholder Indemnified Parties receive from any third party with respect Purchaser Indemnitees would recover under Section 10.2(b)(i) exceeds the Deductible, in which case the Seller Indemnitees shall be entitled to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and recover the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing all such Losses in accordance with excess of the terms of this Agreement.Deductible;
(dii) Notwithstanding anything the Seller Indemnitees shall not be entitled to recover Losses for claims made pursuant to Section 10.2(b) in excess of an amount equal to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, Cap; and in any of no event shall the agreements contemplated hereby or thereby, Seller Indemnitees be entitled to recover more than the maximum aggregate liability of any Company Stockholder Cap with respect to Losses (provided that the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, foregoing shall never exceed not limit Parent’s obligations to pay the amount of Common Merger Consideration actually received by such Company Stockholderpursuant to Section 2.12(a)).
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Limitations on Indemnification Obligations. (a) The rights of the Purchaser Indemnified Parties Indemnitees to indemnification pursuant to the provision of Section 10.2 other than as arising in respect of a Third Party Claim are subject to the following limitations:
(i) The Purchaser Indemnitees shall not be entitled to recover Losses for any Losses unless and claims made against Sxxxxxx under Section 10.2(a)(i)(A) with respect to breaches of the Non-Fundamental Representations (1) until such time as the Losses in the cumulative aggregate for amount which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Indemnitees would recover under Section 10.2(a)(i) exceeds $250,000 75,000 (the "Purchaser Loss Threshold"“Deductible”), at in which time case the Purchaser Indemnified Parties Indemnitees shall be entitled to recover the aggregate amount of all such Losses in excess of the Deductible and (2) for an amount in excess of the Purchaser Loss Threshold. Except for those Losses which arise lower of (x) $1,000,000.00 or (y) the aggregate Earn-out of the indemnification for Taxes under Article 7 Payments actually paid or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization)payable hereunder, and Section 2.16 (Tax MattersB) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 the Fundamental Representations for an amount in excess of the aggregate Earn-out Payments actually paid or payable hereunder;
(Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalizationii) and 2.16 (Tax Matters) of this Agreement and actual fraud The Purchaser Indemnitees shall not exceed be entitled to recover Losses for claims made against the Selling Parties other than Sxxxxxx under Section 10.2(b)(i) (A) with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion breaches of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for Non-Fundamental Representations (1) until the cumulative aggregate amount which the Purchaser Indemnified Parties are Indemnitees would recover under Section 10.2(b)(i) exceeds the Deductible, in which case the Purchaser Indemnitees shall be entitled to be indemnified hereunder shall be reduced by (i) recover the aggregate amount of any all such Losses in excess of the Deductible and (2) for an amount in excess of $1,000,000.00, and (B) with respect to breaches of the Fundamental Representations for an amount in excess of the Seller Closing Payment; and
(iii) In the event a Purchaser Indemnitee recovers the full amount of Losses sought pursuant to Section 10.2 from an Indemnifying Party and thereafter receives (A) insurance proceeds which directly attributable to, and in payment or reimbursement of, the Losses, (B) indemnity or contribution amounts from third parties (other than Purchaser Indemnified Parties recover or any Company) with respect to such Loss; Losses, or (iiC) any indemnitydirect, contribution or other similar payment which recognizable Tax benefit as a result of any such Losses, then the Purchaser Indemnified Parties receive from any third party with respect Indemnitee shall refund to such Loss; Indemnifying Party the amount thereof (net of costs of collection and (iii) similar costs). To the extent an indemnifiable Loss is covered by insurance and such coverage is confirmed by the insurer, then the Indemnifying Party shall not be liable for the amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited Loss so covered by insurance to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion extent of the amount of such Tax Benefitreceived by the Indemnified Party.
(b) Each Loss Any claim for which indemnification hereunder arising from a single event or occurrence may be asserted under one or more of the Company Stockholder separate clauses set forth in Section 10.2, and the assertion of a claim for indemnification under one clause shall not preclude or restrict the indemnified party from asserting a claim for indemnification under one or more different clauses, provided, however, that any Losses recovered by an Indemnified Parties are entitled Party under one clause shall be credited against Losses sought to be indemnified hereunder shall be reduced by (i) recovered under a different clause and arising from the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnitysame event, contribution occurrence or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Lossfacts.
(c) This Section 6.8 is Except for a breach of his Restrictive Covenant, and except as set forth in no way intended to affect Sections 10.7(i), (ii) or (iii), the obligation of Purchaser to deliver the Merger Consideration and the aggregate maximum amount of Credit Agreement Debt being Losses for which Sxxxxxx may be liable under this Article 10 shall not exceed the Consideration paid by Purchaser at Closing in accordance with the terms of this Agreementor payable to Sxxxxxx hereunder.
(d) Notwithstanding anything the foregoing, the Parties agree that, with respect to the contrary contained herein, in the Indemnification Escrow Agreementmatters set forth on Schedule 10.5(d), the Working Capital Escrow Agreementterms, or the Stockholder Representative Agreement, provisions and limitations set forth therein shall apply in any of the agreements contemplated hereby or thereby, the maximum aggregate liability lieu of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholderprovisions set forth herein otherwise applicable thereto.
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Limitations on Indemnification Obligations. Notwithstanding anything herein to the contrary, the rights of the Indemnified Parties to indemnification pursuant to the provisions of this ARTICLE X are subject to the following limitations:
(a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of any and all Losses shall be determined net of (i) any amounts actually recovered by any Indemnified Party under any insurance policies from other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses (net of the Purchaser cost of recovery and increases in insurance premiums) and (ii) any cash Tax benefits actually realized by the Indemnified Parties (or their direct or indirect beneficial owners) in the year of such Loss Threshold. Except for those Losses which arise or the next succeeding taxable year that are attributable to any deduction, loss, credit or other Tax benefit resulting from or arising out of such Loss;
(b) an Indemnified Party’s right to make a claim for indemnification hereunder shall expire (i) with respect to Section 10.01(a) and Section 10.01(c) on the indemnification for Taxes under Article 7 or a breach of date that is one year from the representations Closing Date, (ii) with respect to Section 10.01(b) on April 15, 2020 and warranties contained in (iii) with respect to Section 2.1 (Organization10.01(d), Section 2.2 on such date, if any, that the Company shall no longer have any obligations or liabilities under the TS Earn-Out Agreement;
(Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersc) or actual fraud, in no event shall the Losses for which Indemnifying Parties have any obligation to indemnify the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an Losses incurred under (i) Section 10.01(a) until the total amount equal of Losses the Indemnified Parties would recover pursuant to $6.0 million, and in any event Losses the terms hereof with respect to Section 10.01(a) equals or exceeds $500,000 or (ii) Section 10.01(c) until the indemnification for Taxes under Article 7 or total amount of Losses the Indemnified Parties would recover pursuant to the terms hereof with respect to breaches of Sections 2.1 (Organization)Section 10.01(c) equals or exceeds $500,000, 2.2 (Subsidiaries)at which point, 2.4 (Execution and Delivery)in each case, 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect the Sellers will be obligated to a Company Stockholder such Company Stockholder's Pro Rata Portion of indemnify the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled for the entire amount of any such indemnifiable Losses (for the avoidance of doubt, this Section 10.03(c) does not apply to be indemnified hereunder any Losses recoverable pursuant to Section 10.01(b) or Section 10.01(d));
(d) in no event shall be reduced by the Indemnifying Parties’ aggregate liability arising out of (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; Section 10.01(a) exceed $25 million, (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; Section 10.01(c) exceed $25 million and (iii) an amount equal Section 10.01(b) exceed $500 million (for the avoidance of doubt, this Section 10.03(d) does not apply to any net Tax Benefits of the Purchaser Indemnified Parties attributable Losses recoverable pursuant to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.Section 10.01(d));
(be) Each Loss in no event shall the Indemnifying Parties be liable for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnityconsequential, contribution indirect, special, exemplary, punitive, incidental or enhanced damages, or other similar payment types of damages, including, but not limited to, damages for lost profits, lost revenues, lost business or diminution in value, regardless of whether such damages were foreseeable and the legal or equitable theory (contract, tort or otherwise) upon which the Company Stockholder Indemnified Parties receive from claim was made; provided that the limitation in this Section 10.03(e) shall not apply to any such damages that are payable to a third party with respect to such Loss.by an Indemnified Party as determined by a court of competent jurisdiction in a final, non-appealable judgement; and
(cf) This Section 6.8 is in no way intended event shall the Indemnifying Parties be liable for the reduction or unavailability of net operating losses of the Acquired Companies as a result of the Carve-out Transaction; provided that this Section 10.03(f) shall not be construed to affect mean that the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing indemnification obligations set forth in accordance with the terms of this Agreement.
(dSection 10.01(c) Notwithstanding anything would be unavailable to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability extent of any Company Stockholder actual Tax liability due and payable to a taxing authority directly resulting from the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company StockholderCarve-out Transaction.
Appears in 1 contract
Samples: Stock Purchase Agreement (Double Eagle Acquisition Corp.)
Limitations on Indemnification Obligations. The rights of the Parent Indemnified Parties to indemnification pursuant to the provisions of Section 9.02 are subject to the following limitations, notwithstanding anything in this Agreement to the contrary:
(a) The Purchaser Parent Indemnified Parties shall not be entitled to recover for any Losses unless and pursuant to Section 9.02(a)(i) until such time as the Losses in the aggregate for total amount which the Purchaser Parent Indemnified Parties are entitled to be indemnified hereunderwould recover under Section 9.02(a)(i), including the indemnification but for Taxes set forth in Article 7this Section 9.04(a), exceed exceeds Four Million Five Hundred Thousand Dollars ($250,000 4,500,000) (the "Purchaser Loss Threshold"“Deductible”), at which time whereupon the Purchaser Parent Indemnified Parties shall be entitled to recover indemnification for all such Losses in excess of the Deductible subject to the proviso in Section 9.02(a); provided, however, that the Deductible shall not apply to Losses in respect of claims for breach of representations and warranties related to Company Fundamental Representations.
(b) The sole and exclusive source of recovery in respect of any indemnification claim made by any Parent Indemnified Party pursuant to Section 9.02 shall be the Indemnification Escrow Amount. In no event shall (i) any Securityholder or any Affiliate thereof or any other Person have any direct liability or obligation in respect of any such indemnification claim, or (ii) the Parent Indemnified Parties be entitled to recover any Losses in respect of any indemnification claim made pursuant to this Article IX from any source other than the Indemnification Escrow Account, it being agreed that on the date the Indemnification Escrow Amount is reduced to zero (0) for any reason (including due to the release of the Indemnification Escrow Amount from the Indemnification Escrow Account on the Survival Termination Date), the Parent Indemnified Parties shall have no further rights to indemnification pursuant to this Article IX.
(c) The amount of any Loss subject to indemnification under this Article IX shall be calculated net of any insurance proceeds or any indemnity, contribution or other similar payment actually received by the Purchaser Indemnitee from any third party with respect thereto.
(d) The amount of any Loss Threshold. Except for those Losses which arise out subject to indemnification under this Article IX or Section 7.03(b) shall be calculated (i) net of any Tax Benefit actually realized by the Parent Indemnified Party in the Tax year of the Loss and (ii) increased by the amount of any Tax Cost incurred by the Parent Indemnified Party as a result of the receipt or accrual of any indemnification for Taxes under payment.
(e) For all purposes of this Article 7 IX and Section 7.03(b), any inaccuracy or a breach of the representations and warranties contained in Section 2.1 this Agreement (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution other than the Company’s representations and Delivery), Section 2.6 (Capitalization), warranties in Sections 3.10(a) and Section 2.16 (Tax Matters3.07) or actual fraud, in no event shall the Losses for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect determined without reference to the indemnification for Taxes under Article 7 terms “material,” “Material Adverse Effect” and other similar qualifications as to materiality contained in or with respect to breaches of Sections 2.1 (Organization), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect otherwise applicable to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; representations and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefitwarranties.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Limitations on Indemnification Obligations. The rights to indemnification pursuant to the provisions of this Agreement are subject to the following limitations:
(a) The Purchaser Indemnified Parties the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.1(a) (other than Losses unless and relating to breaches of the Fundamental Representations) until such time as the total amount of Losses in the aggregate for (or series of related Losses) which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed Buyer Indemnitees would recover under Section 8.1(a) exceeds $250,000 275,000 (the "Purchaser Loss Threshold"“Deductible”), at which time and to the Purchaser Indemnified Parties extent Losses claimed exceed the Deductible, the Buyer Indemnitees shall be entitled to recover all such Losses in excess of the Deductible;
(b) the Buyer Indemnitees shall not be entitled to recover for any particular Loss pursuant to Section 8.1(a) relating to breaches of Section 4.12 (Financial Statements) until the total amount of Losses (or series of related Losses) which the Purchaser Loss Threshold. Except for those Losses which arise out of Buyer Indemnitees would recover under Section 8.1(a) exceeds $250,000 (the indemnification for Taxes under Article 7 or a breach of the representations and warranties contained in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization“Financial Statements Deductible”), and Section 2.16 (Tax Matters) or actual fraudto the extent Losses claimed exceed the Financial Statements Deductible, the Buyer Indemnitees shall be entitled to recover all Losses in excess of the Financial Statements Deductible. The Parties acknowledge that they have engaged in extensive discussion together and in conjunction with the Company’s auditors regarding the calculation of EBITDA, the amount of accounts receivable, the allowance for doubtful accounts, and working capital, in each case, of the Group Companies and as set forth on the attached Exhibit K. The Parties acknowledge their agreement with Exhibit K based upon the facts and circumstances as known at such time of agreement, and further acknowledge and agree that no event shall the Losses for which the Purchaser Indemnified Parties are entitled to indemnification claims can be indemnified hereunder exceed, made by Buyer (i) with respect to the matters set forth on Exhibit K, unless such indemnification claims are based on the development and/or disclosure of, facts and/or circumstances, which such facts and circumstances were not taken into account in the preparation of Exhibit K, thereby resulting in an error and/or omission with respect to the matters contained in Exhibit K and (ii) for any Company Stockholder, Losses solely arising from any restatements of the Financial Statements resulting from changes to applicable accounting rules or regulations or a change in interpretation of such accounting rules or regulations or a change in a policy or practice at Buyer or Buyer’s Affiliates election from historical policy or practice; and
(c) the Buyer Indemnitees shall not be entitled to recover Losses pursuant to Section 8.1 in the aggregate in excess of an amount equal to $6.0 million, and in any event Losses with respect to forty percent (40%) of the indemnification for Taxes under Article 7 or with respect to breaches of Sections 2.1 Purchase Price (Organizationthe “Cap”), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (Capitalization) and 2.16 (Tax Matters) of this Agreement and actual fraud shall not exceed with respect other than Losses relating to a Company Stockholder such Company Stockholder's Pro Rata Portion of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; Pre-Closing Taxes, (ii) any indemnitybreach of any covenant made by Seller in this Agreement, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to fraud committed by the Seller or any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability its Affiliates or (iv) any breach of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitFundamental Representation.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Membership Interest Purchase Agreement (Radiation Therapy Services Holdings, Inc.)
Limitations on Indemnification Obligations. The respective obligations of Seller and the Seller Owners to indemnify the Buyer Indemnified Persons pursuant to Section 13.02(a) and of the Buyer Parties to indemnify the Seller Indemnified Persons pursuant to Section 13.02(b) are subject to the following additional limitations and qualifications:
(a) The Purchaser Indemnified Parties Seller and the Seller Owners shall have no indemnification obligation pursuant to Section 13.02(a)(i) with respect to any individual claim or series of claims having the same nature or origin where the Losses relating thereto are less than $20,000.00, and such items less than $20,000.00 will not be counted or aggregated for purposes of calculating the Seller Deductible; provided, however, that if the amount of Losses with respect to any individual claim or series of claims having the same nature or origin aggregate to $20,000.00 or more, the full amount of such Losses shall be subject to indemnification obligation of Seller and the Seller Owners under Section 13.02(a)(i); provided further that this Subsection (a) shall not be entitled apply with respect to recover the indemnification obligation of Seller and the Seller Owners pursuant to Section 13.02(a)(i) on account of the breach of any of the Special Representations (Losses subject to such indemnification obligation pursuant to Section 13.02(a)(i) on account of the breach of any of the Special Representations being "Special Representation Losses") or any of the Secondary Representations (Losses subject to such indemnification obligation pursuant to Section 13.02(a)(i) on account of the breach of any of the Secondary Representations being "Secondary Representation Losses").
(b) Seller and the Seller Owners shall have no indemnification obligation pursuant to Section 13.02(a)(i) for any Losses unless and until such time as the Losses in the aggregate amount of all Losses incurred by the Buyer Indemnified Persons exceeds $408,252.00 (the "Seller Deductible"), and then only for the amount by which such Losses exceed the Purchaser Indemnified Parties are entitled Seller Deductible; provided, however, that this Subsection (b) shall not apply with respect to be indemnified hereunderthe indemnification obligation of Seller and the Seller Owners pursuant to Section 13.02(a)(i) on account of any Special Representation Losses or any Secondary Representation Losses.
(c) The maximum aggregate indemnification obligation of Seller and the Seller Owners under Section 13.02(a)(i) for Losses on account of breach of the General Representations and Secondary Representations other than any Excluded Matters shall not exceed the R&W Escrow Amount (the "General Seller Cap"). The maximum aggregate indemnification obligation of Seller and the Seller Owners under Section 13.02(a)(i) for Losses on account of the Excluded Matters (other than with respect to any Special Representations Loss that is an Excluded Matter) (Losses subject to such indemnification obligation being "Excluded Matters Losses"), including the indemnification for Taxes set forth in Article 7Secondary Representation Losses with respect to Secondary Representations which are Excluded Matters, shall not exceed $250,000 (the "Purchaser Loss ThresholdExcluded Matter Seller Cap"). The maximum aggregate indemnification obligation of Seller and the Seller Owners under Section 13.02(a) shall not exceed the Purchase Price, at which time as adjusted pursuant to Section 2.09 (the Purchaser Indemnified Parties "Ultimate Seller Cap").
(d) The maximum aggregate indemnification obligation of any Seller Owner on account of the Excluded Matters Losses shall be entitled not exceed the product obtained by multiplying the applicable Excluded Matter Seller Cap times such Seller Owner's Pro Ration Percentage (for each Seller Owner, the "Excluded Matter Pro Rated Cap"). The maximum aggregate indemnification obligation of any Seller Owner under Section 13.02(a) shall not exceed the product obtained by multiplying the Ultimate Seller Cap times such Seller Owner's Pro Ration Percentage (for each Seller Owner, the "Ultimate Pro Rated Cap").
(e) Notwithstanding anything in this Agreement to recover all such the contrary, no Seller Owner shall have any liability for any Loss, except in the case of Losses resulting from a Seller Owner Misrepresentation or a Seller Owner Covenant Breach, in excess of the amount equal to the product obtained by multiplying the amount of such Loss times such Seller Owner's Pro Ration Percentage.
(f) For the avoidance of doubt, no costs or expenses (including Court costs, and attorneys', accountants', investigators' and experts' fees and expenses) incurred by any of the Purchaser Loss Threshold. Except for those Losses which arise out of the indemnification for Taxes under Article 7 Selling Parties in defending any Direct Claim or a breach of the representations and warranties contained Third-Party Claim asserted by any Buyer Indemnified Person shall be taken into account in Section 2.1 (Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Matters) or actual fraud, in no event shall the determining Losses for which purposes for calculating whether or not the Purchaser Indemnified Seller Deductible, the General Seller Cap, the Excluded Matter Seller Cap, the Ultimate Seller Cap, any Excluded Matter Pro Rated Cap or any Ultimate Pro Rated Cap has been exceed or may be recoverable by the Selling Parties are entitled from the R&W Escrow Fund.
(g) The Buyer Parties shall have no indemnification obligation pursuant to be indemnified hereunder exceed, Section 13.02(b)(i) with respect to any Company Stockholder, an amount equal to individual claim or series of claims having the same nature or origin where the Losses relating thereto are less than $6.0 million20,000.00, and in any event such items less than $20,000.00 will not be counted or aggregated for purposes of calculating the Buyer Deductible; provided, however, that if the amount of such Losses with respect to any individual claim or series of claims having the same nature or origin aggregate to $20,000.00 or more, the full amount of such Losses shall be subject to the Buyer Parties' indemnification for Taxes obligation under Article 7 or Section 13.02(b)(i); provided further that this Subsection (g) shall not apply with respect to breaches the Buyer Parties' indemnification obligation pursuant to Section 13.02(b)(i) on account of Sections 2.1 the breach of any of the Special Representations.
(Organizationh) The Buyer Parties shall have no indemnification obligation pursuant to Section 13.02(b)(i) for any Losses until the aggregate amount of all Losses incurred by the Seller Indemnified Persons exceeds $408,252.00 (the "Buyer Deductible"), 2.2 and then only for the amount by which such Losses exceed the Buyer Deductible; provided, however, that this Subsection (Subsidiaries), 2.4 h) shall not apply with respect to the Buyer Parties' indemnification obligation pursuant to Section 13.02(b)(i) on account of the breach of any of the Special Representations.
(Execution i) The maximum aggregate indemnification obligation of the Buyer Parties under Section 13.02(b)(i) on account of breach of the Buyer Parties' representations and Delivery), 2.6 warranties set forth in this Agreement (Capitalizationother than Fundamental Representations) and 2.16 under Section 13.02(b)(ii) shall not exceed $10,000,000.00 (Tax Mattersthe "General Buyer Cap"). The maximum aggregate indemnification obligation of the Buyer Parties under Section 13.02(b) shall not exceed the Purchase Price, as adjusted pursuant to Section 2.07 (the "Ultimate Buyer Cap").
(j) None of the limitations on Seller's and the Seller Owners' indemnification obligations under Section 13.02(a) set forth in this Section 13.04 shall apply with respect to Losses which would be their obligation under Section 13.02(a) but for this Section 13.04 if the matter giving rise to such Losses was Fraud, intentional misrepresentation in ARTICLE III or ARTICLE IV, or conduct punishable under applicable criminal Law of such Selling Party. None of the limitations on the Buyer Parties' indemnification obligations under Section 13.02(b) set forth in this Section 13.04 shall apply with respect to Losses which would be their obligation under Section 13.02(b) but for this Section 13.04 if the matter giving rise to such Losses was Fraud, intentional misrepresentation in ARTICLE V, or conduct punishable under applicable criminal Law of such Buyer Party.
(k) For the avoidance of doubt, no costs or expenses (including Court costs, and attorneys', accountants', investigators' and experts' fees and expenses) incurred by either of the Buyer Parties in defending any Direct Claim or Third-Party Claim asserted by any Seller Indemnified Person shall be taken into account in determining Losses for purposes for calculating whether or not the Buyer Deductible, the General Buyer Cap, or the Ultimate Buyer Cap has been exceeded.
(l) Notwithstanding any other provision of this Agreement and actual fraud shall not exceed to the contrary, except with respect to a Company Stockholder such Company Stockholder's Pro Rata Portion breach of Section 3.14(d), Seller and Seller Owners will have no obligation to indemnify any Buyer Indemnified Persons from and against any Taxes of the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties Acquired Companies that are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; (ii) any indemnity, contribution or other similar payment which the Purchaser Indemnified Parties receive from any third party with respect to such Loss; and (iii) an amount equal to any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration actually received by such Company Stockholder. If a Post-Closing Tax Benefit attributable to a Loss is realized by the Purchaser Indemnified Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax BenefitPeriods.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Loss; and (ii) any indemnity, contribution or other similar payment which the Company Stockholder Indemnified Parties receive from any third party with respect to such Loss.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Limitations on Indemnification Obligations. Notwithstanding anything herein to the contrary, the rights of the Indemnified Parties to indemnification pursuant to the provisions of this Article X are subject to the following limitations:
(a) The Purchaser Indemnified Parties shall not be entitled to recover for any Losses unless and until such time as the Losses in the aggregate for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder, including the indemnification for Taxes set forth in Article 7, exceed $250,000 (the "Purchaser Loss Threshold"), at which time the Purchaser Indemnified Parties shall be entitled to recover all such Losses in excess of the amount of any and all Losses shall be determined net of (i) any amounts actually recovered by any Indemnified Party under any insurance policies from other collateral sources (such as contractual indemnities of any Person which are contained outside of this Agreement) with respect to such Losses (net of the Purchaser cost of recovery and increases in insurance premiums) and (ii) any cash Tax benefits actually realized by the Indemnified Parties (or their direct or indirect beneficial owners) in the year of such Loss Threshold. Except for those Losses which arise or the next succeeding taxable year that are attributable to any deduction, loss, credit or other Tax benefit resulting from or arising out of the such Loss;
(b) an Indemnified Party’s right to make a claim for indemnification for Taxes under this Article 7 or a breach of the representations and warranties contained in Section 2.1 X shall expire on March 31, 2020;
(Organization), Section 2.2 (Subsidiaries), Section 2.4 (Execution and Delivery), Section 2.6 (Capitalization), and Section 2.16 (Tax Mattersc) or actual fraud, in no event shall the Losses for which Indemnifying Parties have any obligation to indemnify the Purchaser Indemnified Parties are entitled to be indemnified hereunder exceed, with respect to any Company Stockholder, an amount equal to $6.0 million, and in any event Losses with respect to the indemnification for Taxes incurred under Article 7 or with respect X until the total amount of Losses the Indemnified Parties would recover pursuant to breaches of Sections 2.1 (OrganizationSection 10.01(i), 2.2 (Subsidiaries), 2.4 (Execution and Delivery), 2.6 (CapitalizationSection 10.01(ii) and 2.16 (Tax MattersSection 10.01(iii) of this Agreement and actual fraud shall not exceed with respect in the aggregate equals or exceeds $500,000, at which point, the Seller will be obligated to a Company Stockholder such Company Stockholder's Pro Rata Portion of indemnify the Common Merger Consideration actually received by such Company Stockholder. Each Loss for which the Purchaser Indemnified Parties are entitled to be indemnified hereunder for the entire amount of any such indemnifiable Losses;
(d) in no event shall be reduced by the Indemnifying Parties’ aggregate liability for Losses arising (i) the amount of any insurance proceeds which the Purchaser Indemnified Parties recover with respect to such Loss; under Section 10.01(i) exceed $82.0 million and (ii) any indemnity, contribution or other similar payment which under Section 10.01(iii) exceed $6,262,395; provided that the Purchaser Indemnified Parties receive from any third party with respect to such Loss; Indemnifying Parties’ liability for Losses arising under Sections 10.01(i) and (iii) an amount equal to shall not exceed $82.0 million in the aggregate; and provided further that the Indemnifying Parties’ aggregate liability for Losses arising under Section 10.01(ii) shall not be limited, except that any net Tax Benefits of the Purchaser Indemnified Parties attributable to such Loss. The liability of any Company Stockholder for damages under this Agreement shall be several and not joint, and any assertion of Losses against any Company Stockholder may only be made pro rata based on such Company Stockholder's Pro Rata Portion and limited to the Common Merger Consideration amounts actually received by such Company Stockholder. If a Tax Benefit attributable to a Loss is realized paid by the Purchaser Indemnified Indemnifying Parties after the taxable year of payment of the Loss, Purchaser shall pay to each Company Stockholder an amount in cash equal to such stockholder's Pro Rata Portion of the amount of such Tax Benefit.
(b) Each Loss for which the Company Stockholder Indemnified Parties are entitled to be indemnified hereunder shall be reduced by (i) the amount of any insurance proceeds which the Company Stockholder Indemnified Parties recover with respect to such Lossany Losses incurred under Section 10.1(ii) shall be taken into account in determining the limitations under this Section 10.03(d); and and
(iie) in no event shall the Indemnifying Parties be liable for any indemnityconsequential, contribution indirect, special, exemplary, punitive, incidental or enhanced damages, or other similar payment types of damages, including, but not limited to, damages for lost profits, lost revenues, lost business or diminution in value, regardless of whether such damages were foreseeable and the legal or equitable theory (contract, tort or otherwise) upon which the Company Stockholder Indemnified Parties receive from claim was made; provided that the limitation in this Section 10.03(e) shall not apply to any such damages that are payable to a third party with respect to such Lossby an Indemnified Party as determined by a court of competent jurisdiction in a final, non-appealable judgment.
(c) This Section 6.8 is in no way intended to affect the obligation of Purchaser to deliver the Merger Consideration and the aggregate amount of Credit Agreement Debt being paid by Purchaser at Closing in accordance with the terms of this Agreement.
(d) Notwithstanding anything to the contrary contained herein, in the Indemnification Escrow Agreement, the Working Capital Escrow Agreement, or the Stockholder Representative Agreement, and in any of the agreements contemplated hereby or thereby, the maximum aggregate liability of any Company Stockholder to the Purchaser and Merger Sub, whether by reason of indemnification, reimbursement or other payment obligation of any type, any liability in tort, contract or otherwise, shall never exceed the amount of Common Merger Consideration actually received by such Company Stockholder.
Appears in 1 contract
Samples: Merger Agreement (Platinum Eagle Acquisition Corp.)
