Common use of Limitations to Indemnification Clause in Contracts

Limitations to Indemnification. (a) The indemnification obligations of a Party (i) with respect to any breach, violation or inaccuracy of any representation or warranty made by such Party contained in this Agreement, other than with respect to those contained in Section 3.2(c) and Section 3.2(e), shall survive the Closing for a period of eighteen (18) months following the Closing Date, (ii) with respect to indemnification obligations relating to Sections 6.12, 6.13, 6.17, 6.18, 6.20, 8.3, 9.2(a)(iii), 9.4 and 11.1 and Article XII, shall survive the Closing indefinitely, and (iii) with respect to all other indemnification obligations, shall survive the Closing for three years following the Closing Date. All claims for indemnification made within the specified survival period shall survive the expiration of such periods. (i) Each of the representations and warranties contained in Articles III-IV and their various subparagraphs are intended for the benefit of Company and Operating Partnership, on the one hand, and Owners on the other hand, and may be waived in whole or in part, by them, but only by an instrument in writing signed by them. All rights to indemnification shall survive the Closing of the Transaction as provided in Section 9.3(a), but shall be limited as provided in Section 9.3(b)(ii) to the extent that the indemnitee gives the indemnitor written notice prior to Closing of same, or the indemnitee otherwise obtains knowledge of same prior to Closing, and the indemnitor nevertheless elects to close this transaction. Any such written notice shall state in the first paragraph thereof and in all capitalized letters that "THIS NOTICE IS GIVEN PURSUANT TO THE COMBINED CONTRIBUTION AND PURCHASE AND SALE AGREEMENT MADE AS OF DECEMBER 23, 2004, AND RELATES TO AN INDEMNIFICATION CLAIM UNDER SECTION 9.3(b)." (ii) The indemnification obligations contained in this Agreement of Company and Operating Partnership, on the one hand, and Owners, on the other hand, (1) shall not survive Closing with respect to any such Losses (which Losses shall be deemed waived), other than Losses resulting from a breach of the representation and warranty contained in Section 3.2(c), if such was known by the indemnitee prior to the Effective Date, and (2) shall survive Closing as provided in Section 9.3(a) but shall not exceed $2,000,000 in the aggregate (and shall be subject to the Threshold as provided in Section 9.3(c) with respect to Losses resulting from any inaccuracy, breach or violation of any representation or warranty other than those contained in Section 3.2(c) made by such breaching Party in this Agreement) if same becomes known to the indemnitee between the Effective Date and the Closing Date and the indemnitee does not terminate this Agreement pursuant to Section 10.1. Nothing in this Section 9.3(b)(ii) shall limit (1) the indemnitee's right not to proceed to and conclude Closing hereunder or terminate pursuant to and in accordance with Article X or (2) the indemnification obligations of an indemnitor other than with respect to those described in this Section 9.3(b)(ii). For purposes of certainty, set forth below are three illustrations as to the manner in which the foregoing provisions of this Section 9.3(b)(ii) would operate: Illustration No. 1 (Post-Signing Period Breaches of $4.5 million) If (A) as of the Effective Date, Company had knowledge of one or more circumstances that would otherwise provide a claim for indemnification but for the application of this Section 9.3(b)(ii) (each a "Breach") in this Agreement ("Pre-Signing Breaches"), (B) between the Effective Date and the Closing Date, the Company obtains knowledge of one or more Breaches made by the Owners in this Agreement or obtains knowledge that one or more Breaches has become untrue or inaccurate ("Post-Singing Breaches"), the Losses in respect of which are $4.5 million, and (C) notwithstanding such Pre-Signing Breaches and Post-Signing Breaches and the Losses in respect thereof, Company elects to complete the Transactions, then (a) Owners shall not be obligated, liable or responsible to Company for any Losses in respect of the Pre-Signing Breaches, (b) Owners shall be liable with respect to the first $2.0 million of such Losses in respect of Post-Signing Breaches ($200,000 of which shall be applied to the Threshold with respect to any applicable representations and warranties), and (y) to the extent that the amount of such Losses is agreed upon prior to Closing, the same shall be credited against the Sale Consideration and (z) to the extent that the amount of such Losses is not agreed upon prior to Closing, such Losses shall be subject to indemnification in favor of Company pursuant to Section 9.1, and (c) Owners shall not be obligated, liable or responsible to Company for the remaining $2.5 million of Losses in excess of $2.0 million. Illustration No. 2 (Post-Signing Period Breaches of $2.0 million) If (A) as of the Effective Date, Company had knowledge of one or more Pre-Signing Breaches, (B) between the Effective Date and the Closing Date, Company obtains knowledge of one or more Post-Signing Breaches, the Losses in respect of which are $2.0 million, and (C) notwithstanding such Pre-Signing Breaches and Post-Signing Breaches and the Losses in respect thereof, Company elects to complete the Transactions, then (a) Owners shall not be obligated, liable or responsible to Company for any Losses in respect of the Pre-Signing Breaches, and (b) Owners shall be liable with respect to $2.0 million of such Losses in respect of Post-Signing Breaches ($200,000 of which shall be applied to the Threshold with respect to any applicable representations and warranties), and (y) to the extent that the amount of such Losses is agreed upon prior to Closing, the same shall be credited against the Sale Consideration and (z) to the extent that the amount of such Losses is not agreed upon prior to Closing, such Losses shall be subject to indemnification in favor of Company pursuant to Section 9.1. Illustration No. 3 (Post-Signing Period Breaches of $100,000) If (A) as of the Effective Date, Company had knowledge of one or more Pre-Signing Breaches, (B) between the Effective Date and the Closing Date, Company obtains knowledge of one or more Post-Signing Breaches, the Losses in respect of which are $100,000, and (C) notwithstanding such Pre-Signing Breaches, and Post-Signing Breaches and the Losses in respect thereof, Company elects to complete the Transactions, then (a) Owners shall not be obligated, liable or responsible to Company for any Losses in respect of the Pre-Signing Breaches, and (b) the amount of Losses in respect of Post-Signing Breaches ($100,000) shall be applied to the Threshold with respect to any applicable representations and warranties and shall be subject to indemnification in favor of Company pursuant to Section 9.1 (but only to the extent that additional Losses resulting from one or more Breaches hereunder are discovered by Company after the Closing, but before the expiration of the survival periods set forth in Section 9.3(a), exceed $100,000). (i) Neither Owners, on the one hand, nor Company, on the other hand, shall have any liability under Section 9.1(a)(i) (other than claims relating to Section 3.2(c)) or Section 9.2(a)(i), respectively, unless, in each case, the aggregate of all Losses relating thereto for which either such Parties would, but for this proviso, in the aggregate be liable exceeds on a cumulative basis an amount equal to Two Hundred Thousand Dollars ($200,000) (the "Threshold"), subject to reduction on account of previous Post-Signing Breaches relating to applicable representations and warranties as provided above, and then to the extent of all of such Losses (i.e., from the first dollar of such Losses); and (ii) such Party's aggregate liability under such Sections shall in no event exceed Twenty Million Dollars ($20,000,000) (the "Cap"). (d) Notwithstanding anything in this Agreement to the contrary, (i) except in the case of actual fraud by a Party, the liability of each Party resulting from the breach or default by such Party shall be limited to actual damages incurred by the injured Party and (ii) except in the case of actual fraud by a Party, the Parties waive their rights to recover from the other Parties consequential, punitive, exemplary, and speculative damages or any other remedies available in contract, tort, law or otherwise. The Parties shall have the right to adjust the Sale Consideration by the reasonably estimated amount of (i) any indemnification claims for Losses resulting from any inaccuracy, breach or violation of any representation or warranty made by a Party in this Agreement which in the aggregate exceed the Threshold and that become known between the Effective Date and the Closing Date and (ii) any other indemnification claims known at Closing, and in respect of both (i) and (ii) other than any such claims that expressly do not survive Closing.

Limitations to Indemnification. (a) The indemnification obligations of a Party (i) with respect to any breach, violation or inaccuracy of any representation or warranty made by such Party contained in this Agreement, other than with respect to those contained in Section 3.2(c) and Section 3.2(e), shall survive the Closing for a period of eighteen (18) months following the Closing Date, (ii) with respect to indemnification obligations relating to Sections 6.12, 6.13, 6.17, 6.18, 6.20, 8.3, 9.2(a)(iii), 9.4 and 11.1 and Article XII, shall survive the Closing indefinitely, and (iii) with respect to all other indemnification obligations, shall survive the Closing for three years following the Closing Date. All claims for indemnification made within the specified survival period shall survive the expiration of such periods. (ib) Each of the representations and warranties contained in Articles III-IV and their various subparagraphs are intended for the benefit of Company and Operating Partnership, on the one hand, and Owners on the other hand, and may be waived in whole or in part, by them, but only by an instrument in writing signed by them. All rights to indemnification shall survive the Closing of the Transaction as provided in Section 9.3(a), but shall be limited as provided in Section 9.3(b)(ii) to the extent that the indemnitee gives the indemnitor written notice prior to Closing of same, or the indemnitee otherwise obtains knowledge of same prior to Closing, and the indemnitor nevertheless elects to close this transaction. Any such written notice shall state in the first paragraph thereof and in all capitalized letters that "“THIS NOTICE IS GIVEN PURSUANT TO THE COMBINED CONTRIBUTION AND PURCHASE AND SALE AGREEMENT MADE AS OF DECEMBER 23, 2004, AND RELATES TO AN INDEMNIFICATION CLAIM UNDER SECTION 9.3(b)." (ii) The indemnification obligations contained in this Agreement of Company and Operating Partnership, on the one hand, and Owners, on the other hand, (1) shall not survive Closing with respect to any such Losses (which Losses shall be deemed waived), other than Losses resulting from a breach of the representation and warranty contained in Section 3.2(c), if such was known by the indemnitee prior to the Effective Date, and (2) shall survive Closing as provided in Section 9.3(a) but shall not exceed $2,000,000 in the aggregate (and shall be subject to the Threshold as provided in Section 9.3(c) with respect to Losses resulting from any inaccuracy, breach or violation of any representation or warranty other than those contained in Section 3.2(c) made by such breaching Party in this Agreement) if same becomes known to the indemnitee between the Effective Date and the Closing Date and the indemnitee does not terminate this Agreement pursuant to Section 10.1. Nothing in this Section 9.3(b)(ii) shall limit (1) the indemnitee's right not to proceed to and conclude Closing hereunder or terminate pursuant to and in accordance with Article X or (2) the indemnification obligations of an indemnitor other than with respect to those described in this Section 9.3(b)(ii). For purposes of certainty, set forth below are three illustrations as to the manner in which the foregoing provisions of this Section 9.3(b)(ii) would operate: Illustration No. 1 (Post-Signing Period Breaches of $4.5 million) If (A) as of the Effective Date, Company had knowledge of one or more circumstances that would otherwise provide a claim for indemnification but for the application of this Section 9.3(b)(ii) (each a "Breach") in this Agreement ("Pre-Signing Breaches"), (B) between the Effective Date and the Closing Date, the Company obtains knowledge of one or more Breaches made by the Owners in this Agreement or obtains knowledge that one or more Breaches has become untrue or inaccurate ("Post-Singing Breaches"), the Losses in respect of which are $4.5 million, and (C) notwithstanding such Pre-Signing Breaches and Post-Signing Breaches and the Losses in respect thereof, Company elects to complete the Transactions, then (a) Owners shall not be obligated, liable or responsible to Company for any Losses in respect of the Pre-Signing Breaches, (b) Owners shall be liable with respect to the first $2.0 million of such Losses in respect of Post-Signing Breaches ($200,000 of which shall be applied to the Threshold with respect to any applicable representations and warranties), and (y) to the extent that the amount of such Losses is agreed upon prior to Closing, the same shall be credited against the Sale Consideration and (z) to the extent that the amount of such Losses is not agreed upon prior to Closing, such Losses shall be subject to indemnification in favor of Company pursuant to Section 9.1, and (c) Owners shall not be obligated, liable or responsible to Company for the remaining $2.5 million of Losses in excess of $2.0 million. Illustration No. 2 (Post-Signing Period Breaches of $2.0 million) If (A) as of the Effective Date, Company had knowledge of one or more Pre-Signing Breaches, (B) between the Effective Date and the Closing Date, Company obtains knowledge of one or more Post-Signing Breaches, the Losses in respect of which are $2.0 million, and (C) notwithstanding such Pre-Signing Breaches and Post-Signing Breaches and the Losses in respect thereof, Company elects to complete the Transactions, then (a) Owners shall not be obligated, liable or responsible to Company for any Losses in respect of the Pre-Signing Breaches, and (b) Owners shall be liable with respect to $2.0 million of such Losses in respect of Post-Signing Breaches ($200,000 of which shall be applied to the Threshold with respect to any applicable representations and warranties), and (y) to the extent that the amount of such Losses is agreed upon prior to Closing, the same shall be credited against the Sale Consideration and (z) to the extent that the amount of such Losses is not agreed upon prior to Closing, such Losses shall be subject to indemnification in favor of Company pursuant to Section 9.1. Illustration No. 3 (Post-Signing Period Breaches of $100,000) If (A) as of the Effective Date, Company had knowledge of one or more Pre-Signing Breaches, (B) between the Effective Date and the Closing Date, Company obtains knowledge of one or more Post-Signing Breaches, the Losses in respect of which are $100,000, and (C) notwithstanding such Pre-Signing Breaches, and Post-Signing Breaches and the Losses in respect thereof, Company elects to complete the Transactions, then (a) Owners shall not be obligated, liable or responsible to Company for any Losses in respect of the Pre-Signing Breaches, and (b) the amount of Losses in respect of Post-Signing Breaches ($100,000) shall be applied to the Threshold with respect to any applicable representations and warranties and shall be subject to indemnification in favor of Company pursuant to Section 9.1 (but only to the extent that additional Losses resulting from one or more Breaches hereunder are discovered by Company after the Closing, but before the expiration of the survival periods set forth in Section 9.3(a), exceed $100,000). (i) Neither Owners, on the one hand, nor Company, on the other hand, shall have any liability under Section 9.1(a)(i) (other than claims relating to Section 3.2(c)) or Section 9.2(a)(i), respectively, unless, in each case, the aggregate of all Losses relating thereto for which either such Parties would, but for this proviso, in the aggregate be liable exceeds on a cumulative basis an amount equal to Two Hundred Thousand Dollars ($200,000) (the "Threshold"), subject to reduction on account of previous Post-Signing Breaches relating to applicable representations and warranties as provided above, and then to the extent of all of such Losses (i.e., from the first dollar of such Losses); and (ii) such Party's aggregate liability under such Sections shall in no event exceed Twenty Million Dollars ($20,000,000) (the "Cap"). (d) Notwithstanding anything in this Agreement to the contrary, (i) except in the case of actual fraud by a Party, the liability of each Party resulting from the breach or default by such Party shall be limited to actual damages incurred by the injured Party and (ii) except in the case of actual fraud by a Party, the Parties waive their rights to recover from the other Parties consequential, punitive, exemplary, and speculative damages or any other remedies available in contract, tort, law or otherwise. The Parties shall have the right to adjust the Sale Consideration by the reasonably estimated amount of (i) any indemnification claims for Losses resulting from any inaccuracy, breach or violation of any representation or warranty made by a Party in this Agreement which in the aggregate exceed the Threshold and that become known between the Effective Date and the Closing Date and (ii) any other indemnification claims known at Closing, and in respect of both (i) and (ii) other than any such claims that expressly do not survive Closing.”