Common use of Purchaser’s Right of Offset Clause in Contracts

Purchaser’s Right of Offset. (a) Purchaser may defer the payment to Sellers of a part of the amount payable pursuant to Section 1.8 equal to the excess, if any, of the aggregate amount under dispute pursuant to claims made by Purchaser under ARTICLE VIII over the sum of (i) Escrow Amount plus (ii) sixty percent (60%) of the Holdback Amount (after reduction for any payment received with respect to previous claims and any Purchase Price reduction arising as a result of a Retention Breach) and until such time as (X) the disputes pending as of the Earn-Out Payment Date have been finally resolved (whether by a settlement agreement among the parties or by a binding decision (“décision exécutoire”) rendered pursuant to Section 10.8) or (Y) until the aggregate amount under dispute has been reduced to a level equal to or less than the available balance in (i) the Escrow Account plus (ii) sixty percent (60%) of the Holdback Amount (after reduction for any Holdback reduction with respect to any previous claims and any Purchase Price reduction arising as a result of a Retention Breach) as determined for the Parties by the Escrow Agent. Purchaser shall have the right to offset any payment obligation Purchaser may have pursuant to Section 1.8 to any Seller by the aggregate amount by which any amount finally determined to be due to Purchaser or to Purchaser Indemnified Persons by any and all Sellers pursuant to this Agreement exceeds the amounts available and paid to Purchaser by the Escrow Agent out of the Escrow Amount. Any remaining balance of Purchaser’s payment obligation pursuant to Section 1.8 shall be paid to each Seller in accordance with the instructions provided by the Sellers’ Representative. (b) For the avoidance of doubt, except as provided in Section 8.2(c) and except for (i) instances of fraud, dol or any right of off-set provided by law, and (ii) the Purchaser’s right of off-set with the Earn-Out Amount as provided for in this Section, the foregoing paragraph shall not create any payment obligation for any of the Sellers (except the Selling Executives) above the Escrow Amount or, with respect to the Selling Executives, above sixty percent (60%) of the Holdback Amount (after reduction for any Holdback reduction with respect to any previous claims and any Purchase Price reduction arising as a result of a Retention Breach), so that no Seller may be required to pay to Purchaser and/or to Purchaser Indemnified Persons any amount, either in cash or in shares of Purchaser Common Stock, that it may hold or have received pursuant to this Agreement.

Purchaser’s Right of Offset. 4.4.1 In the event that the Purchaser shall become entitled to assert against the Vendor and/or the Warrantors any claim for breach of any of the Warranties or any claim under Clause 8 (a“Relevant Claim”), the following provisions shall apply 4.4.1.1 the Purchaser shall give written notice to the Vendor and the Warrantors setting out in reasonable detail the amount of the Relevant Claim and the legal basis for such claim. The Vendor shall have a period of ten (10) Business Days from the date of the Purchaser’s notice to either accept the Relevant Claim or to reject the Relevant Claim, in each case by written notice to the Purchaser. If the Vendor accepts the Relevant Claim, the Purchaser shall be entitled to offset the amount of the Relevant Claim against the balance of any Retention Amounts and/or, any other amount payable by the Purchaser to the Vendor under this Agreement (as the Purchaser may defer choose). If the payment Vendor rejects the Relevant Claim, the Purchaser shall be entitled to Sellers of a part withdraw the amount of the Relevant Claim from the Retention Amounts or to offset such amount from any other amount payable pursuant to Section 1.8 equal by the Purchaser to the excess, if any, of Vendor under this Agreement (as the aggregate amount under dispute pursuant to claims made by Purchaser under ARTICLE VIII over the sum of (i) Escrow Amount plus (ii) sixty percent (60%) of the Holdback Amount (after reduction for any payment received with respect to previous claims and any Purchase Price reduction arising as a result of a Retention Breachmay choose) and until to pay such time as (X) sum into the disputes pending as of the Earn-Out Payment Date have been finally resolved (whether by a settlement agreement among the parties or by a binding decision (“décision exécutoire”) rendered pursuant to Section 10.8) or (Y) until the aggregate amount under dispute has been reduced to a level equal to or less than the available balance in (i) Escrow Account. No monies shall be withdrawn from the Escrow Account plus (ii) sixty percent (60%) before the Relevant Claim is settled and each withdrawal will require a joint instruction signed by a signatory from the Vendor’s Solicitors and the Purchaser’s Solicitors. Each of the Holdback Amount (after reduction for parties undertakes with the other to promptly instruct their respective solicitors to give effect to the operation of this clause 4.4.1.1; 4.4.1.2 as soon as reasonably practicable following settlement of any Holdback reduction with respect Relevant Claim to any previous claims which clause 4.4.1.1 refers, the Vendor shall instruct the Vendor’s Solicitors and any Purchase Price reduction arising as a result of a Retention Breach) as determined for the Parties by the Escrow Agent. Purchaser shall have instruct the right Purchaser’s Solicitors to offset any payment obligation Purchaser may have pursuant instruct Citibank N.A to Section 1.8 to any Seller by make the aggregate amount by which any amount finally determined to be due to Purchaser or to Purchaser Indemnified Persons by any and all Sellers pursuant to this Agreement exceeds the amounts available and paid to Purchaser by the Escrow Agent following payments out of the Escrow Amount. Any remaining balance Account: (a) to the Purchaser, the amount of Purchaser’s payment obligation pursuant any Relevant Claim settled in favour of the Purchaser together with a proportion of the interest earned on the Escrow Account equal to Section 1.8 shall be the proportion that the sum paid to each Seller the Purchaser under this clause 4.4.1.2 (a) (excluding interest) bears to the total sum paid in accordance with to the instructions provided by Escrow Account in respect of the Sellers’ Representative.Relevant Claim; (b) For to the avoidance credit of doubtthe Retention Amounts, except as provided the balance (if any) of the Escrow Account (including interest) in Section 8.2(crespect of any Relevant Claim which was placed in the Escrow Account from the Retention Amounts; (c) and except for to the Vendor, the balance (iif any) instances of fraud, dol the Escrow Account (including interest) in respect of a Relevant Claim which was placed in the Escrow Account from other amounts payable by the Purchaser to the Vendor under this Agreement. 4.4.2 Nothing in clause 4.4 shall prejudice or any limit the right of off-set provided by law, and (ii) the Purchaser’s right of off-set with Purchaser to make any claim against the Earn-Out Amount as provided for in Vendors and/or the Warrantors either under this Section, the foregoing paragraph shall not create any payment obligation for Agreement or under any of the Sellers (except the Selling Executives) above the Escrow Amount or, with respect to the Selling Executives, above sixty percent (60%) of the Holdback Amount (after reduction for any Holdback reduction with respect to any previous claims and any Purchase Price reduction arising as a result of a Retention Breach), so that no Seller may be required to pay to Purchaser and/or to Purchaser Indemnified Persons any amount, either in cash or in shares of Purchaser Common Stock, that it may hold or have received documents executed pursuant to this Agreement. 4.4.3 For the purpose of this clause 4.4, a claim shall be treated as settled if: 4.4.3.1 the Vendor and the Purchaser shall so agree in writing such written agreement not to be unreasonably withheld or delayed following any oral agreement; or 4.4.3.2 a court of competent jurisdiction has awarded judgment in respect of the claim and no right of appeal lies in respect of such judgment or the parties are debarred by passage of time or otherwise from making an appeal.

Purchaser’s Right of Offset. Purchaser shall have the right and option, but not the obligation, to offset and reduce the Earn Out: (a) Purchaser may defer to the payment to Sellers of a part extent any Accounts Receivable of the Company (other than Hold Back Receivables identified by mutual agreement of the Parties in accordance with the Section 3.12(a) definition) which were in existence on February 28, 2006 have not been collected prior to May 31, 2006; (b) by the amount payable pursuant of any indemnity or reimbursement due to Purchaser for any Taxes under Section 1.8 equal 7.4(a); (c) by any obligation of the Company or its Subsidiaries arising out of the matter described on Schedule 3.22 (a) to the excessextent not paid by the Sellers after Closing (it being recognized that Sellers are solely responsible for paying such obligation, but if anythe Company or any Subsidiary agrees to pay such obligation on Sellers’ behalf, such payment shall not constitute an adjustment to EBITDA and Sellers agree to fully reimburse Company or its applicable Subsidiary for such payment no later than the date of payment of the Earn Out, whether by offset or direct payment); and (d) by any indemnity amount owed by the Sellers to Purchaser under Section 13 below. With respect to amounts under 12(d) above for which Purchaser claims it is entitled to indemnification hereunder, the Purchaser shall have no right of set-off except to the extent that the aggregate amount under dispute pursuant to claims made by Purchaser under ARTICLE VIII over the sum of (i) Escrow Amount plus (ii) sixty percent (60%) of the Holdback Amount (after reduction set-off claim(s) exceeds $100,000, calculated for any payment received with respect to previous claims and any Purchase Price reduction arising as a result purposes of a Retention Breach) and until such time as (X) the disputes pending as of the Earn-Out Payment Date have been finally resolved (whether by a settlement agreement among the parties or by a binding decision (“décision exécutoire”) rendered pursuant to this Section 10.8) or (Y) until the aggregate amount under dispute has been reduced to a level equal to or less than the available balance in (i) the Escrow Account plus (ii) sixty percent (60%) of the Holdback Amount (after reduction for any Holdback reduction with respect 12 without regard to any previous claims materiality standard contained in the applicable representation, warranty or covenant, and any Purchase Price reduction arising as a result of a Retention Breach) as determined for in which case the Parties by the Escrow Agent. Purchaser shall have the right to off-set and reduce the Earn Out for all claim amounts in excess of $100,000. Before Purchaser exercises any right of offset any payment obligation it shall provide the Sellers with written notice of the amount of the claim and its intention to exercise its right of offset. The Sellers shall have fifteen (15) days from receipt of Purchaser’s notice to accept or reject the amount claimed by Purchaser. If the Sellers accept the amount claimed by Purchaser, Purchaser may exercise its right of offset under this Section 12. If Sellers rejects the amount claimed by Purchaser, the Sellers and the Purchaser shall seek in good faith to resolve any differences they have pursuant with respect to Section 1.8 the claim and offset amount during the fifteen (15) day period following the Sellers’ rejection of the Purchaser’s claim. If the dispute is not resolved to any Seller the mutual satisfaction of the Purchaser and the Sellers within such fifteen (15) day period, each party shall have the right to require that the dispute be submitted to arbitration before one (1) arbitrator selected jointly by the aggregate amount by which parties, applying such arbitration rules as the parties mutually agree, and if they cannot agree, applying the Commercial Rules of the American Arbitration Association (“AAA”) without the need to institute an AAA proceeding. The ruling of the arbitrator shall be final and binding on all parties hereto, and may be entered as a judgment in any amount finally determined court of competent jurisdiction. The prevailing party shall be entitled to be due to Purchaser or to Purchaser Indemnified Persons by any costs of the arbitration and all Sellers reasonable attorney’s fees. Any arbitration pursuant to this Agreement exceeds the amounts available and paid to Purchaser provision shall be held in Maryland at a location agreed upon by the Escrow Agent out parties, applying the substantive laws of the Escrow AmountState of Maryland with respect to the construction and interpretation of this Agreement. Any remaining balance In the event any or all of Purchaser’s payment obligation pursuant the Sellers reject any amount claimed by Purchaser hereunder, or in the event of any dispute regarding the Earn Out, Purchaser shall have the right to Section 1.8 retain and withhold the portion of the Earn Out equal to the amount of the disputed claim until the question of entitlement of the Sellers to delivery of all or a portion of such withheld amount of the Earn Out shall be paid to each Seller have been determined by (i) an agreement in writing executed by the Sellers and the Purchaser or (ii) a final judgment of an arbitrator chosen in accordance with this Section 12. Notwithstanding anything to the instructions provided by the Sellers’ Representative. (b) For the avoidance of doubtcontrary in this Section 12 or Section 13, except as provided in Section 8.2(c) Purchaser shall have no right to set off and except for (i) instances of fraud, dol or any right of off-set provided by law, and (ii) the Purchaser’s right of off-set with reduce the Earn-Out Amount as provided for in this Section, the foregoing paragraph shall not create any payment obligation or to receive indemnification for any amounts which have been included in the calculation of the Sellers (except Company’s EBITDA for the Selling Executives) above purposes of determining the Escrow Amount or, with respect to the Selling Executives, above sixty percent (60%) of the Holdback Amount (after reduction for any Holdback reduction with respect to any previous claims and any Purchase Price reduction arising as a result of a Retention Breach), so that no Seller may be required to pay to Purchaser and/or to Purchaser Indemnified Persons any amount, either in cash or in shares of Purchaser Common Stock, that it may hold or have received pursuant to this AgreementEarn-Out.