Common use of Rights of Offset Clause in Contracts

Rights of Offset. (a) Parent shall be entitled to offset against the Aggregate Second Payment Amount, an amount equal to the amount of any damage, claim, loss, cost or expense, including, without limitation, interest, penalties, reasonable attorneys’ fees and expenses of investigation, response action, removal action or remedial action (including any consequential or punitive damages) (collectively, “Breach Damages”) incurred by Parent and its respective Affiliates (including, after the Closing, the Surviving Entity), and each of its respective officers, directors, employees, stockholders, partners and agents (the “Covered Parties”) that arise out of or relate to, whether directly or indirectly (i) any misrepresentation (provided that, for purposes of this Section 11.2(a), any representation qualified by materiality shall not be so qualified) or breach of any warranty on the part of the Company contained in this Agreement or in any Schedule or certificate delivered by or on behalf of the Company pursuant to this Agreement, or (ii) any breach or non-performance by the Company of any of its respective covenants or agreements contained in this Agreement or in any Schedule or certificate delivered by or on behalf of the Company pursuant to this Agreement. The term “Breach Damages” as used in this Section 11.2 is not limited to matters asserted by third parties against the Covered Parties, but includes Breach Damages incurred or sustained by such persons in the absence of third-party claims, and payments by a Covered Party shall not be a condition precedent to recovery. Parent shall be entitled to offset pursuant to this subsection (a) only if the aggregate Breach Damages to which Covered Parties are entitled to offset pursuant to this Article 11 exceed $500,000 (the “Deductible Amount”), and if such aggregate Breach Damages exceed the Deductible Amount, Parent shall be entitled to offset against the Aggregate Second Payment Amount only the amount of Breach Damages in excess of the Deductible Amount.

Rights of Offset. (a) Parent In the event the Sellers have denied the ---------------- Buyer's request for indemnification, in whole or in part, the Buyer shall be entitled to offset have the option of recouping all or any part of any Adverse Consequences it may suffer by filing suit against the Aggregate Second Payment AmountSellers pursuant to Section 11(h) below and notifying the Sellers in writing that the Buyer is exercising its rights of offset under this Section 8(e). (i) While Buyer's action against the Sellers is pending, Buyer shall have the right to withhold or to direct the Company to withhold, as applicable, (1) the principal payments due under the Promissory Note (but must continue to pay the interest to Sellers), (2) the Noncompetition Payments (as defined in the Noncompetition Agreement) and (3) any amounts due under a "Put Right" as defined in the Master Tek Shareholder Agreement (collectively, the "Withholds"). (ii) Buyer or the Company, as applicable, must pay the Withholds as they become due to a court registry or the escrow established pursuant to the Collateral Agreement, will be considered as payments made in a timely manner under each of the Promissory Note, Noncompetition Agreement and Master Tek Shareholder Agreement, and shall not constitute a default under any of such agreements. (iii) The Withholds shall not exceed (1) the amount Buyer reasonably believes the indemnification claim is worth, net of the amounts set forth in Section 8(d)(vi), or (2) the maximum limit on indemnification established by Section 8(d)(vii). (iv) In the event that Buyer prevails on its claim for indemnification against Sellers, Buyer and Sellers shall direct the registry or escrow agent to release the Withholds deposited therein in accordance with this Section to Buyer. The recoupment by Buyer of any principal amounts under the Promissory Note shall affect the timing and amount of payments required under the Promissory Note in the same manner as if the Maker (as defined in the Promissory Note) had made a permitted prepayment (without premium or penalty) thereunder and recoupment of payments under the Noncompetition Agreement and Master Tek Shareholder Agreement shall constitute regular payments under each of those Agreements. (v) In the event that Buyer does not prevail on its claim for indemnification against Sellers, (1) Buyer and Seller shall direct the registry or escrow agent to release the Withholds deposited therein in accordance with this Section to the Sellers, and (2) Buyer shall make to the Sellers an accelerated payment of principal under the Promissory Note in an amount equal to twice the principal amount of any damage, claim, loss, cost or expense, including, without limitation, interest, penalties, reasonable attorneys’ fees and expenses of investigation, response action, removal action or remedial action (including any consequential or punitive damages) (collectively, “Breach Damages”) incurred by Parent and its respective Affiliates (including, after the Closing, the Surviving Entity), and each of its respective officers, directors, employees, stockholders, partners and agents (the “Covered Parties”) that arise out of or relate to, whether directly or indirectly (i) any misrepresentation (provided that, for purposes of this Section 11.2(a), any representation qualified by materiality shall not be so qualified) or breach of any warranty on the Promissory Note actually withheld as part of the Company contained in this Agreement or in any Schedule or certificate delivered by or on behalf Withholds (the aggregate payment not to exceed the maximum amount of principal then remaining under the Company pursuant to this Agreement, or (ii) any breach or non-performance by the Company of any of its respective covenants or agreements contained in this Agreement or in any Schedule or certificate delivered by or on behalf of the Company pursuant to this AgreementPromissory Note). The term “Breach Damages” as used in this Section 11.2 is not limited accelerated payment of principal under the Promissory Note to matters asserted by third parties against Sellers shall affect the Covered Parties, but includes Breach Damages incurred or sustained by such persons timing and amount of payments required under the Promissory Note in the absence of third-party claims, and payments by a Covered Party shall not be a condition precedent to recovery. Parent shall be entitled to offset pursuant to this subsection (a) only same manner as if the aggregate Breach Damages to which Covered Parties are entitled to offset pursuant to this Article 11 exceed $500,000 Maker had made a permitted prepayment (the “Deductible Amount”), and if such aggregate Breach Damages exceed the Deductible Amount, Parent shall be entitled to offset against the Aggregate Second Payment Amount only the amount of Breach Damages in excess of the Deductible Amountwithout premium or penalty) thereunder.