Common use of Recoupment and Set Off Clause in Contracts

Recoupment and Set Off. Bank and NMS each has the right of recoupment and set-off. Specifically, Bank may offset or recoup any outstanding/uncollected amounts owed by Merchant from: (i) any amounts Bank would otherwise be obligated to deposit into the Designated Account; (ii) any other amounts Bank or NMS may owe Merchant under this Agreement or any other agreement; and (iii) any funds in the Designated Account or Reserve Account. Merchant acknowledges that in the event of a bankruptcy proceeding, in order for Merchant to provide adequate protection under the Bankruptcy Code to Bank and NMS, Merchant must create or maintain the Reserve Account as required by Bank and NMS, and Bank must have the right to offset against the Reserve Account for any and all obligations which Merchant may owe to Bank and/or NMS, without regard to whether the obligations relate to Sales Drafts initiated or created before or after the filing of the bankruptcy petition.