AMIE » Topics » INDEMNIFICATION

This excerpt taken from the AMIE 8-K filed Apr 7, 2006.

INDEMNIFICATION

10.1 General. From and after the Closing, the parties shall indemnify each other as provided in this Article X. As used in this Agreement, the term “Damages” shall mean all Liabilities, demands, claims, actions or causes of action, regulatory, legislative or judicial proceedings or investigations, assessments, levies, losses, fines, penalties, damages, costs and expenses, including reasonable attorneys’, accountants’, investigators’, and experts’ fees and expenses, sustained or incurred in connection with the defense or investigation of any such claim. The term “Damages” shall not be deemed to include consequential or special damages incurred by such Party. The parties acknowledge and agree that following the Closing the indemnification provisions set forth in this Article X shall constitute the parties’ sole and exclusive remedy with respect to the transactions contemplated by this Agreement, other than for claims of, or causes of action arising from, a Party’s intentional misrepresentation or willful misconduct. For purposes of determining the amount of Damages for which indemnification is provided hereunder (but not for the purpose of determining whether a breach of a representation, warranty or covenant has occurred), each of the representations, warranties and covenants made by any Party in this Agreement or the other Acquisition Documents shall be deemed to have been made without the inclusion of limitations or qualifications as to materiality such as the word “material,” if with the inclusion of such limitation or qualification the representation, warranty or covenant was breached. The obligations of the Sellers under Section 10.2 and the obligations of the Purchaser under Section 10.3 shall not be affected by any knowledge by any Indemnified Party (as defined below) at or prior to the Closing of any breach of or inaccuracy in any representation or warranty.

 

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10.2 Indemnification Obligations of the Sellers. The Sellers shall, jointly and severally, defend, indemnify, save and keep harmless the Purchaser (including their officers and directors) and its Affiliates and their respective heirs, successors and assigns (each, a “Purchaser Indemnified Party”) against and from any Damages sustained or incurred by any Purchaser Indemnified Party resulting from or arising out of or by virtue of:

(a) any inaccuracy in or breach of any representation or warranty made by the Sellers in this Agreement or in the other Acquisition Documents;

(b) any breach by the Sellers of, or failure by the Sellers to comply with, any covenant or obligation of the Sellers contained in this Agreement or in the other Acquisition Documents;

(c) any claim or cause of action for fraudulent transfers under any state or federal Law;

(d) the Excluded Liabilities;

(e) any Liabilities related to the ownership, use or operation of the Acquired Assets or the use or conduct of the Business prior to the Closing, except for the Assumed Liabilities; and

(f) the Excluded Assets.

10.3 Indemnification Obligations of the Purchaser. The Purchaser shall defend, indemnify, save and keep harmless the Sellers (including their officers and directors) and their Affiliates, and their respective heirs, successors and assigns (each, a “Seller Indemnified Party,”) against and from any Damages sustained or incurred by any Seller Indemnified Party resulting from or arising out of or by virtue of:

(a) any inaccuracy in or breach of any representation or warranty made by the Purchaser in this Agreement or in the other Acquisition Documents;

(b) any breach by the Purchaser of, or failure by the Purchaser to comply with, any covenant or obligation contained in this Agreement or the other Acquisition Documents;

(c) the Assumed Liabilities; and

(d) Liabilities relating to the operation by the Purchaser of, or any act or omission occurring in respect of, the Business or the ownership of the Acquired Assets from and after the Closing Date to the extent the Sellers are not obligated by Section 10.2 (without giving effect to Section 10.6) to indemnify Purchaser Indemnified Parties.

10.4 Procedure for Indemnification — Third-Party Claims. If a complaint, claim or legal action is brought or made by a third party (“Third Party Claim”) against any Purchaser Indemnified Party or Seller Indemnified Party (collectively, an “Indemnified Party”), the Indemnified Party shall give written notice of such Third Party Claim to the indemnifying party (“Indemnifying Party”) promptly after the Indemnified Party receives notice of that claim, which notice shall

 

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include a copy of any letter, complaint or similar writing received by the Indemnified Party; provided, however, that any failure to provide, or delay in providing, such notification shall not constitute a bar or defense to indemnification except to the extent such failure has prejudiced the rights or defenses of the Indemnifying Party.

If the Indemnifying Party acknowledges in writing to the Indemnified Party that the Indemnifying Party is liable and has indemnity obligations for any Damages resulting from such Third Party Claim, the Indemnifying Party shall have the right, at its sole cost and expense, to assume the defense of such Third Party Claim with counsel reasonably satisfactory to the Indemnified Party. After notice from the Indemnifying Party to the Indemnified Party of the Indemnifying Party’s election to assume defense of the Third Party Claim, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in defending such Third Party Claim except as provided below. If the Indemnifying Party elects to assume the defense and select counsel, the Indemnified Party may participate in the defense through its own separate counsel, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) otherwise specifically agreed in writing by the Indemnifying Party, or (ii) counsel selected by the Indemnified Party determines that, because of a conflict of interest between the Indemnifying Party and the Indemnified Party, counsel for the Indemnifying Party cannot adequately represent both parties in defending the action (in which case the Indemnifying Party shall not have the right to direct the defense of the Third Party Claim on the Indemnified Party’s behalf). Notwithstanding the foregoing, if the resolution of any such Third Party Claim involves or relates to Taxes and could impact the Taxes or Tax position of the Indemnified Party for any Post-Closing Tax Period, the Indemnified Party shall be entitled to control the defense of such Third Party Claim.

The Indemnifying Party’s failure to notify an Indemnified Party of its election to defend such Third Party Claim within twenty-one (21) days after notice of the Third Party Claim was given to the Indemnifying Party shall be deemed a waiver by the Indemnifying Party of its rights to defend the Third Party Claim, in which case the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel employed by the Indemnified Party.

If the Indemnifying Party assumes the defense of the Third Party Claim, its obligations shall include taking all steps necessary in defending the Third Party Claim and holding the Indemnified Party harmless against any and all Damages caused by or arising out of any settlement approved by the Indemnified Party or any judgment in connection with such claim or litigation.

If the Indemnifying Party does not assume the defense of the Third Party Claim, the Indemnified Party may defend against such claim or litigation in such manner as it deems appropriate; provided, however, that the Indemnified Party may not settle such Third Party Claim without the Indemnifying Party’s prior written consent. The Indemnifying Party may not withhold such consent unless it has provided security of a type and in an amount reasonably acceptable to the Indemnified Party for the payment of its indemnification obligations for such Third Party Claim. The Indemnifying Party shall promptly reimburse the Indemnified Party for the Damages caused by or arising out of such settlement, or for the amount of any judgment rendered on the Third Party Claim, and for all costs and expenses the Indemnified Party reasonably incurred in defending the claim.

 

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The Indemnifying Party may settle any Third Party Claim, in its sole discretion, without the Indemnified Party’s prior written consent, provided that such settlement (i) involves only the payment of cash by the Indemnifying Party to the claimant, (ii) does not impose any other obligation on the Indemnifying Party or any Liability or obligation on the Indemnified Party, (iii) releases the Indemnified Party completely in connection with such Third Party Claim, and (iv) includes a full dismissal of the litigation or proceeding against the Indemnified Party. Notwithstanding the foregoing, the Indemnifying Party may not settle any Third Party Claim that involves or relates to Taxes and could impact the Taxes or Tax position of the Indemnified Party for any Post-Closing Tax Period without the prior written consent of the Indemnified Party.

10.5 Procedure for Indemnification — Other Claims. A claim for indemnification for any matter not involving a Third Party Claim may be asserted by notice to the Party from whom indemnification is sought.

10.6 Limitation of Liability. Notwithstanding anything in this Agreement to the contrary, other than for claims of, or causes of action arising from, a Party’s intentional misrepresentation or willful misconduct, the Liability of the Indemnifying Party to indemnify any Indemnified Party against any Damages pursuant to Sections 10.2(a) or 10.3(a) shall be limited to claims for indemnification with respect to which an Indemnified Party has given to the Indemnifying Party notice of such claim within the Survival Period specified in Section 11.1. In addition, notwithstanding anything in this Agreement to the contrary, other than for claims of, or causes of action arising from, the Sellers’ intentional misrepresentation or willful misconduct:

 

  (i) the Liability of the Sellers to indemnify the Purchaser Indemnified Parties against any Damages pursuant to Section 10.2(a) for the breach of the Sellers’ representations and warranties set forth in Section 5.1(g) shall be limited to the amounts by which the Damages in the aggregate exceed $250,000; and

 

  (ii) the Liability of the Sellers to indemnify the Purchase Indemnified Parties against any Damages pursuant to Section 10.2(a) for the breach of the Sellers’ representations and warranties in the remainder of Section 5.1, other than those set forth in Section 5.1(g), shall be limited to the amounts by which the Damages in the aggregate exceed $50,000; and

 

  (iii) the total Liability of the Sellers to indemnify the Purchaser Indemnified Parties shall in no event exceed $500,000; provided that, with respect to breaches of the representations and warranties set forth in Section 5.1(e), 5.1(g) and 5.1(h), the total liability of the Sellers to indemnify the Purchaser Indemnified Parties shall in no event exceed $12,000,000

Other than for claims of, or causes of action arising from the Purchaser’s intentional misrepresentation or willful misconduct, the Liability of the Purchaser to indemnify the Seller Indemnified Parties against any Damages pursuant to Section 10.3(a) shall be limited to the amounts by which the Damages in the aggregate exceed $50,000, with the total Liability of the Purchaser to indemnify the Seller Indemnified Parties in no event to exceed $500,000.

 

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This excerpt taken from the AMIE 8-K filed Dec 28, 2005.

INDEMNIFICATION

 

Section 8.1 Survival of Representations and Warranties. All of the representations and warranties of the Parties contained in this Agreement shall survive the Closing hereunder (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty or covenant at the time of Closing) and continue in full force and effect for eighteen (18) months following the Closing, except with respect to representations and warranties contained in Sections 3.1(e), 4.1, 4.2, 4.14, 4.15, 4.22, 4.25 and 4.27 hereof, which shall survive the Closing hereunder (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty or covenant at the time of Closing) and continue in full force and effect forever thereafter (subject to any applicable statutes of limitations).

 

Section 8.2 Indemnification of the Buyer. Subject to the provisions of this Article VIII, the Seller shall indemnify, defend, save and keep the Buyer and its respective Affiliates (including Ambassadors and each Target), their respective officers, directors, successors and assigns, and the Vessels (collectively, the “Buyer Indemnitees”), harmless against and from all liability, demands, claims, actions or causes of action, assessments, losses, fines, penalties, costs, damages and expenses, including without limitation, reasonable attorneys’ fees, court costs and other fees, disbursements and expenses, whether payable in cash, property or otherwise (collectively, “Damages”) sustained or incurred by any of the Buyer Indemnitees, arising out of, in connection with, or otherwise with respect to: (i) misrepresentations, breach of any warranty or representation, or non-fulfillment of any agreement or covenant on the part of any Target or the Seller, whether contained in this Agreement or any exhibit or schedule hereto, or any written statement or certificate furnished or to be furnished to the Buyer pursuant hereto or in any closing document delivered by any Target or the Seller to the Buyer in connection herewith, (ii) any claim or cause of action for fraudulent transfers under any state or federal Law; and (iii) the Pre-Closing Liabilities (as defined below). Such obligations apply regardless of the presence of a Third Party Claim (as defined below). For purposes of determining the amount of Damages for which indemnification is provided hereunder (but not for the purpose of determining whether a breach of a representation, warranty or covenant has occurred), each of the representations, warranties and covenants made by any Party in this Agreement or in any certificate or other instrument delivered pursuant hereto, shall be deemed to have been made without the inclusion of limitations or qualifications as to materiality such as the word “material,” if with the inclusion of such limitation or qualification the representation, warranty or covenant was breached. In no

 

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event shall the Seller be liable to the Buyer under this Section 8.2 for any amounts for which the Seller would also be liable to the Buyer under Section 8.3 below. “Pre-Closing Liabilities” shall mean any direct or indirect liability, obligation, indebtedness, expense, claim, deficiency, guarantee or commitment of any kind or nature (whether known or unknown, asserted or unasserted, accrued or unaccrued, liquidated or unliquidated, or due or to become due) of any Target arising in or in any way related to any period prior to the Closing, other than Liabilities shown on the face of the Interim Balance Sheet or incurred in the Ordinary Course of Business and in compliance with Section 4.12 since the Interim Balance Sheet Date, and other than Taxes specifically addressed in Section 8.3, provided however, that notwithstanding any disclosure contained in the Interim Balance Sheet or otherwise, Pre-Closing Liabilities shall include any and all payables to the Seller’s affiliates.

 

Section 8.3 Indemnification for Taxes. The Seller shall indemnify, defend, save and keep the Buyer Indemnitees harmless against all Taxes resulting from, arising out of, or incurred with respect to, any claims that may be asserted by any party based upon, attributable to, or resulting from any Taxes for which the Seller or Target is responsible under this Agreement. Ambassador and Buyer shall indemnify, defend, save and keep the Seller and its respective Affiliates, their respective officers, directors, successors and assigns, harmless against all Taxes resulting from, arising out of, or incurred with respect to, any claims that may be asserted by any party based upon, attributable to, or resulting from any Taxes for which the Buyer is responsible under this Agreement.

 

Each Party shall promptly give the other written notice of all Taxes which the claiming Party has reasonably determined may give rise to a right of indemnification under this Section 8.3, including a computation of the amount of the required indemnification with sufficient detail and particularity to enable the indemnifying Party to reasonably determine the amount of such required indemnification.

 

Section 8.4 Indemnification of the Seller. Subject to the provisions of this Article VIII, the Buyer and Ambassadors shall, jointly and severally, indemnify, defend, save and keep the Seller harmless against and from all Damages sustained or incurred by the Seller as a result of, arising out or by virtue of any misrepresentations, breach of any warranty or representation, or non-fulfillment of any agreement or covenant on the part of the Buyer, whether contained in this Agreement or any exhibit or schedule hereto, or any written statement or certificate furnished or to be furnished to the Seller pursuant hereto or in any closing document delivered by the Buyer to the Seller in connection herewith, or the nonpayment or nonperformance of any Liabilities or obligations of the Targets. Such obligations apply regardless of the presence of a Third Party Claim (as defined below). For purposes of determining the amount of Damages for which indemnification is provided hereunder (but not for the purpose of determining whether a breach of a representation, warranty or covenant has occurred), each of the representations, warranties and covenants made by any party in this Agreement or in any certificate or other instrument delivered pursuant hereto, shall be deemed to have been made without the inclusion of limitations or qualifications as to materiality such as the word “material,” if with the inclusion of such limitation or qualification the representation, warranty or covenant was breached.

 

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Section 8.5 Procedures for Indemnification.

 

(a) Promptly following the receipt by a Person entitled to indemnification under this Article VIII (an “Indemnified Party”) of notice of a demand, claim, action, assessment or proceeding made or brought by a third party, including a Governmental Authority (a “Third Party Claim”), and promptly upon an Indemnified Party becoming aware of the Basis of a claim for Damages, such Indemnified Party: (i) shall notify the Seller, or the Buyer, as applicable (each, an “Indemnifying Party”), of such claim’s existence, setting forth the facts and circumstances in connection with which such Indemnified Party has received such notice or become aware of such Basis; and (ii) specifying the basis hereunder upon which the Indemnified Party’s claim for indemnification is asserted; provided, however, that a failure to provide prompt notification shall not prevent or prejudice a claim under this Article VIII except to the extent such failure has prejudiced the rights or defenses of the Indemnifying Party.

 

(b) The Indemnified Party shall, upon reasonable notice by the Indemnifying Party, tender the defense of a Third Party Claim to the Indemnifying Party. If the Indemnifying Party accepts responsibility for the defense of a Third Party Claim, then the Indemnifying Party shall have the right to contest, defend and litigate the Third Party Claim and shall have the exclusive right, in its discretion exercised in good faith and upon the advice of counsel, and subject to the consent of the Indemnified Party (which shall not be unreasonably withheld) to settle any such matter, either before or after the initiation of litigation, provided that at least ten (10) days prior to any such settlement, they shall give written notice of their intention to settle to the Indemnified Party. The Indemnified Party shall have the right to be represented by counsel at its own expense in any defense conducted by the Indemnifying Party.

 

(c) Notwithstanding the foregoing, in connection with any settlement negotiated by the Indemnifying Party, no Indemnified Party shall be required to: (i) enter into or be bound by or obligated under any settlement (A) that does not include the delivery by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect of such claim or litigation, (B) if the Indemnified Party shall, in writing to the Indemnifying Party within the ten (10) day period prior to such proposed settlement, unreasonably withhold its consent with respect to such settlement proposal as contemplated by Article VIII, and desire to have the Indemnifying Party tender the defense of such matter back to the Indemnified Party, or (C) that requires an Indemnified Party to take any unreasonable affirmative actions as a condition of such settlement; or (ii) consent to the entry of any judgment that does not include a full dismissal of the litigation or proceeding against the Indemnified Party; provided, however, that should the Indemnified Party disapprove of a settlement proposal pursuant to clause (i)(B) above, the Indemnified Party shall thereafter have all of the responsibility for defending, contesting and settling such Third Party Claim but shall not be entitled to indemnification by the Indemnifying Party to the extent that, upon final resolution of such Third Party Claim, the Indemnifying Party’s liability to the Indemnified Party but for this proviso exceeds what the liability to the Indemnified Party would have been if the Indemnified Party were permitted to settle such Third Party Claim in the absence of the Indemnified Party exercising its right under clause (i)(B) above.

 

(d) If, in accordance with the foregoing provisions of this Article VIII, an Indemnified Party shall be entitled to indemnification against a Third Party Claim, and if the

 

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Indemnifying Party shall fail to accept the defense of a Third Party Claim which has been tendered in accordance with this Section 8.5, the Indemnified Party shall have the right, without prejudice to its rights of indemnification hereunder, in its discretion exercised in good faith and upon the advice of counsel, to contest, defend and litigate such Third Party Claim, and may settle such Third Party Claim, either before or after the initiation of litigation, at such time and upon such terms as the Indemnified Party deems fair and reasonable, provided at least ten (10) days prior to any such settlement, written notice of its intention to settle is given to the Indemnifying Party. If, pursuant to this Section 8.5, the Indemnified Party defends or settles a Third Party Claim for which it is entitled to indemnification hereunder, as hereinabove provided, the Indemnified Party shall be reimbursed by the Indemnifying Party for the reasonable attorneys’ fees, expert fees and other expenses of defending the Third Party Claim which are incurred from time to time, forthwith following the presentation to Indemnifying Party of itemized bills for said attorneys’ fees, court costs and other expenses. No failure by the Indemnifying Party to acknowledge in writing its indemnification obligations under this Section 8.5 shall relieve it of such obligations to the extent they exist.

 

(e) The Indemnified Party shall use commercially reasonable efforts to seek recovery from any insurance policies owned by any Target as of the Closing Date with respect to any Damages eligible for reimbursement under said insurance policies.

 

Section 8.6 Release by the Seller. The Seller, as of the Closing Date, hereby releases and discharges each Target and its employees, owners, assets, members, managers, officers and directors from, and agrees and covenants that in no event will the Seller commence any litigation or other legal or administrative proceeding against such Target or any of its employees, owners, assets, members, managers, officers or directors, either in law or equity, relating to any and all claims and demands, known and unknown, suspected and unsuspected, disclosed and undisclosed, for damages, actual, consequential, or otherwise, past, present and future, arising out of or in any way connected with their ownership of the Target Membership Interests or any employment or consulting relationship (other than for disclosed wages or employee benefits accrued but not yet paid, or under debts for borrowed money as listed on Schedule 8.6 hereto) prior to or at the Closing Date. Except for this Agreement and the agreements entered into hereunder, as of the Closing without further action, all member, voting, preemptive, buy-sell, first refusal or similar rights, employment or consulting rights, by agreement or statute, of the Seller, shall terminate as to securities of each Target and as to each Target.

 

ARTICLE IX

 

This excerpt taken from the AMIE 8-K filed Feb 3, 2005.

9.2 Indemnification.

 

(a) From and after the Closing, each holder of Company Common Stock (each an “Indemnifying Party” and collectively, the “Indemnifying Parties”) shall, severally, indemnify,

 

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save and hold harmless Parent and its Affiliates and their respective Representatives (each, a “Parent Indemnified Party” and collectively, the “Parent Indemnified Parties”) from and against any and all costs, losses, Liabilities, obligations, damages, claims, demands and expenses (whether or not arising out of third-party claims), including interest, penalties, costs of mitigation, reasonable attorneys’ fees and all amounts paid in investigation, defense or settlement of any of the foregoing (herein, “Damages”), incurred in connection with, arising out of, resulting from or incident to:

 

(i) any breach of any representation or warranty made by the Company in this Agreement, any Ancillary Agreement or any exhibit, schedule, the Company Disclosure Letter or certificate delivered by the Company pursuant hereto; provided that for purposes of this Section 9.2(a)(i), whether there has occurred a breach by the Company of any representation or warranty which is qualified by materiality (i.e., “material,” “material adverse effect,” “Material Adverse Effect” or similar phrases) shall be determined as if such representation or warranty were made without such qualification;

 

(ii) any breach of any covenant or agreement made, or to be performed, by the Company in this Agreement, any Ancillary Agreement or any exhibit, schedule, the Company Disclosure Letter or certificate delivered by the Company pursuant hereto; provided that for purposes of this Section 9.2(a)(ii), whether there has occurred a breach by the Company of any covenant or agreement which is qualified by materiality (i.e., “material,” “material adverse effect,” “Material Adverse Effect” or similar phrases) shall be determined as if such covenant or agreement were made without such qualification;

 

(iii) any claim arising from the Company Stockholders Representative’s performance of his or her obligations under this Agreement;

 

(iv) any claim by any employee of Bellport for any payments or benefits as a result of the termination of his or her employment with the Company or its successors under any Contract to which the Company and such participant are parties or under any severance policy, practice or plan of the Company;

 

(v) any Taxes of any of the Company or any of its Subsidiaries with respect to any Tax year or portion thereof ending on or before the Closing Date (or for any Tax year beginning before and ending after the Closing Date, to the extent allocable (as determined in the last sentence in Section 6.3(b)) to the portion of such period beginning before and ending on the Closing Date), except to the extent that such Taxes are reflected in the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) shown on the face of the Reference Balance Sheet (rather than in any notes thereto), as such reserve is adjusted for the passage of time through the Closing Date in accordance with past custom and practice of the Company in filing its Tax Returns, and (ii) the unpaid Taxes of any Person (other than the Company and its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract, or otherwise.

 

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(b) Interpretation.

 

(i) The term “Damages” as used in this Section 9.2 is not limited to matters asserted by third parties against a Parent Indemnified Party, but includes Damages incurred or sustained by the Parent Indemnified Party in the absence of Third-Party Claims. Notwithstanding anything in this Agreement to the contrary, the term “Damages” shall not include any consequential damages, claims for lost profits or punitive damages, except where such Damages are incurred due to fraud or willful misconduct.

 

(ii) For purposes of this Article IX, Damages incurred or suffered by a Parent Indemnified Party arising out of any breach of any representation, warranty, covenant or agreement shall be determined without deduction on account of any materiality or Material Adverse Effect qualification contained in any representation, warranty, covenant or agreement giving rise to the claim for indemnification hereunder.

 

9.3 Procedure for Claims between Parties. If a claim for Damages (a “Parent Indemnity Claim”), other than Third-Party Claims under Section 9.3(b) below, is to be made by a Parent Indemnified Party entitled to indemnification hereunder, such party shall give written notice briefly describing the claim and the total monetary damages sought (each, a “Notice”) to the Company Stockholder Representative and the Escrow Agent as soon as practicable after such Parent Indemnified Party becomes aware of any fact, condition or event which gives rise to Damages for which indemnification may be sought under this Article IX. Any failure to submit any such notice of claim to the Company Stockholder Representative shall not relieve any Indemnifying Party of any liability hereunder, except to the extent that the Company Stockholder Representative demonstrates that an Indemnifying Party was actually prejudiced by such failure. The Company Stockholder Representative shall be deemed to have accepted the Notice and Sellers shall be deemed to have agreed to pay the Damages at issue, and the parties shall promptly instruct the Escrow Agent to disburse funds from the Indemnification Escrow in an amount sufficient to pay the Damages, if the Company Stockholder Representative does not send a notice of disagreement to the Parent Indemnified Party within thirty (30) calendar days after receiving the Notice pursuant to Section 9.3.

 

9.4 Defense of Procedure for Third-Party Claims. Except as otherwise provided in Section 6.3(d) with respect to Tax Contests: If a Parent Indemnity claim is to be made by a Parent Indemnified Party entitled to indemnification hereunder in respect of, arising out of or involving a claim made by any third party (each, a “Third-Party Claim”) against the Parent Indemnified Party, the Parent Indemnified Party shall give a Notice to the Company Stockholder Representative and the Escrow Agent as soon as practicable of after becoming aware of such Third-Party Claim. The failure of any Parent Indemnified Party to give timely Notice hereunder shall not affect rights to indemnification hereunder, except to the extent that the Company Stockholder Representative demonstrates that an Indemnifying Party was actually prejudiced by such failure. After such Notice, if the Company Stockholder Representative acknowledges in writing to an Parent Indemnified Party that the Indemnifying Parties are liable and have indemnity obligations for any Damages resulting from any such Third-Party Claim (and if Parent consents, which consent may be withheld in its sole and absolute discretion), then the Company Stockholder Representative shall be entitled, if it so elects at its own cost, risk and expense, (i) to take control of the defense and investigation of such Third-Party Claim, (ii) to employ and

 

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engage attorneys of its own choice (provided that such attorneys are reasonably acceptable to Parent) to handle and defend the same, unless the named parties to such action or proceeding include both one or more Indemnifying Parties, and any such Parent Indemnified Party has been advised in writing by counsel that there may be one or more legal defenses available to such Parent Indemnified Party that are different from or additional to those available to an applicable Indemnifying Party, in which event such Parent Indemnified Party shall be entitled, at the Indemnifying Parties’ cost, risk and expense, to separate counsel of its own choosing, and (iii) to compromise or settle such claim, which compromise or settlement shall be made only with the written consent of the Parent Indemnified Party, such consent not to be unreasonably withheld, provided that any such compromise or settlement shall provide for the absolute and unconditional release of the Parent Indemnified Parties from any liability with respect to such Third-Party Claim. If the Company Stockholder Representative assumes the defense of a Third-Party Claim (to the extend permitted above), the Parent Indemnified Party shall cooperate in all reasonable respects with the Company Stockholder Representative and its attorneys in the investigation, trial and defense of such Third-Party Claim and any appeal arising therefrom; provided, however, that the Parent Indemnified Party may, at its own cost, participate in the investigation, trial and defense of such lawsuit or action and any appeal arising therefrom. The parties shall cooperate with each other in any notifications to insurers. If the Company Stockholder Representative fails to assume the defense of such claim within fifteen (15) calendar days after receipt of the Notice (whether as a result of its election not to assume such defense or the refusal of Parent to grant a request of the Company Stockholder Representative to assume such defense), the Parent Indemnified Party against which such claim has been asserted will have the right to undertake, at the Indemnifying Parties’ cost, risk and expense, the defense, compromise or settlement of such Third-Party Claim on behalf of and for the account and risk of the Indemnifying Parties; provided, however, that such claim shall not be compromised or settled without the written consent of the Company Stockholder Representative, which consent shall not be unreasonably withheld. If the Parent Indemnified Party assumes the defense of the claim, the Parent Indemnified Party will keep the Company Stockholder Representative reasonably informed of the progress of any such defense, compromise or settlement. The Indemnifying Parties shall be liable for any settlement of any Third-Party Claim effected pursuant to and in accordance with this Section 9.4 and for any final judgment (subject to any right of appeal), and each Seller agrees to indemnify and hold harmless the Parent Indemnified Party from and against any Damages by reason of such settlement or judgment.

 

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