Common use of Offset Right Clause in Contracts

Offset Right. Trega and its successors and assigns shall be entitled to recover (the "OFFSET RIGHT") against the Escrow Shares (including, without limitation, any shares issued or issuable as Escrow Shares upon the exercise of any Trega Substitute Option pursuant to the provisions of SCHEDULE 2 hereto) any and all losses, liabilities, taxes, claims, suits, proceedings, demands, judgments, damages, expenses and costs, including, without limitation, reasonable counsel fees, costs and expenses incurred in the investigation, defense or settlement of any claims (collectively, "DAMAGES"), which Trega or the Surviving Corporation may suffer or incur (including, without limitation, as a result of a decrease in or adverse effect upon the value of Trega's investment or ownership interest in the Surviving Corporation) to the extent of and by reason of the inaccuracy or breach of any of the representations, warranties, covenants or agreements of NaviCyte contained in this Agreement or any documents, certificates or agreements delivered pursuant hereto; provided, however, that (i) no Damages shall be recognized for purposes of the Offset Right unless and until total Damages exceed $30,000.00 (at which point all Damages shall be recognized) and (ii) Damages shall be calculated less the amount of any actual tax benefits or insurance proceeds received by Trega (discounted for any insurance premiums paid and any delay in receipt or realization of benefits or proceeds by Trega) as a result of any loss for which the Offset Right is asserted. Notwithstanding their issuance and delivery into the Escrow Account, (i) the Escrow Shares shall be and remain subject to the Offset Right for the benefit of Trega as provided in this Section 6 and (ii) the NaviCyte Securityholders shall have no ability or entitlement whatsoever to transfer any Escrow Shares or any interest therein (including, without limitation, to pledge any Escrow Shares or to grant an interest in any expectation with respect to the Escrow Shares) unless and until such Escrow Shares are distributed to the NaviCyte Securityholders as provided in Section 1 of this Agreement, SCHEDULE 1 hereto and the Escrow Agreement. Without limiting the other provisions of this Agreement or the Escrow Agreement, the NaviCyte Securityholders shall be deemed to have granted to Trega a first-lien security interest in the Escrow Shares as collateral for the recovery by Trega of any and all Damages pursuant to the Offset Right as provided in this Section 6 ("TREGA'S LIEN").

Offset Right. Trega (a) Purchaser shall have the right to withhold payments required to be made by it under this Agreement or to offset payments required to be made under this Agreement against payments that Seller or any Guarantor owe it or its Representatives or Affiliates under this Article XIII. Notwithstanding the foregoing, the withholding and its successors offset rights set forth in this Section 13.8 shall in no way be deemed to limit or override any of Purchaser’s other remedies and assigns rights under this Agreement or under applicable law. Purchaser shall promptly (and in advance of the assertion of any withholding or offset rights) give Seller written notice of any claim with respect to which Purchaser intends to assert the right to withhold payment or assert a right of set off pursuant to this Section 13.8 and the details of the claim in respect of which Purchaser intends to assert such rights. Thereafter, Purchaser and Seller shall meet and endeavor promptly to resolve or settle such claim in good faith. Purchaser’s right to withhold payments under this Section 13.8(a) shall be subject to the limitations of clause (b) below. (i) Purchaser and Seller shall use their respective reasonable good faith efforts to resolve any claim for indemnification to which Purchaser proposes to assert a right to indemnification under clause (a) above within sixty (60) days of the assertion of such Claim by Purchaser during which period Purchaser shall not be entitled to withhold or offset payments which otherwise become due to Seller hereunder. If after such initial sixty (60) day period, the parties have not reached an amicable settlement with respect to the Claim and such Claim involves an amount in excess of $100,000 as set forth in the Claim Notice, Purchaser shall be entitled to recover withhold payments in accordance with clause (the "OFFSET RIGHT"a) against the Escrow Shares (including, without limitation, any shares issued or issuable as Escrow Shares upon the exercise of any Trega Substitute Option pursuant above; provided that in no event shall Purchaser be entitled to the provisions of SCHEDULE 2 hereto) any and all losses, liabilities, taxes, claims, suits, proceedings, demands, judgments, damages, expenses and costs, including, without limitation, reasonable counsel fees, costs and expenses incurred withhold payments in the investigation, defense or settlement of any claims (collectively, "DAMAGES"), an amount which Trega or the Surviving Corporation may suffer or incur (including, without limitation, as a result of a decrease in or adverse effect upon the value of Trega's investment or ownership interest in the Surviving Corporation) to the extent of and by reason of the inaccuracy or breach of any of the representations, warranties, covenants or agreements of NaviCyte contained in this Agreement or any documents, certificates or agreements delivered pursuant hereto; provided, however, that (i) no Damages shall be recognized for purposes of the Offset Right unless and until total Damages exceed $30,000.00 (at which point all Damages shall be recognized) and (ii) Damages shall be calculated less is greater than the amount of the Losses that are alleged to have been incurred or which are estimated in good faith by Purchaser and set forth in a Claim Notice; and provided, further, with respect to a Third Party Claim, Purchaser shall not be entitled to offset or withhold any actual tax benefits or insurance proceeds received by Trega (discounted payment due hereunder if Seller acknowledges that it is responsible to Purchaser for any insurance premiums paid and any delay in receipt or realization of benefits or proceeds by Trega) as a result of any loss for which the Offset Right is asserted. Notwithstanding their issuance and delivery into the Escrow Account, (i) the Escrow Shares shall be and remain subject to the Offset Right for the benefit of Trega as provided in this Section 6 and (ii) the NaviCyte Securityholders shall have no ability or entitlement whatsoever to transfer any Escrow Shares or any interest therein (including, without limitation, to pledge any Escrow Shares or to grant an interest in any expectation indemnification with respect to the Escrow SharesThird Party Claim and agrees to assume the defense of the Third Party Claim in accordance with Section 13.5. (ii) If Purchaser asserts the right to offset or withhold payment in accordance with clause (a) above, and the parties are unable to resolve the applicable claim within the sixty (60) day period referred to in clause (b)(i) above (and Purchaser thereafter withholds amounts otherwise payable to Seller hereunder), Seller shall have the right to initiate arbitration proceedings with a single arbitrator selected by mutual agreement or, if the parties are unable to agree on an arbitrator, appointed under the Commercial Arbitration Rules of the American Arbitration Association for the sole purpose of determining whether Purchaser has the right to retain amounts withheld in accordance with clause (a) because it is likely to prevail on the merits of the Claim in respect to which Purchaser has asserted a right of offset. For the avoidance of doubt, any arbitration proceeding initiated under this clause (b)(ii) shall not finally determine the merits of the underlying Claim, for which the parties shall reserve all right, but shall only establish the entitlement of Purchaser to withhold or offset payments under clause (a) above and the amount that Purchaser is entitled to withhold or offset pending final resolution of the Claim. The decision of the arbitrator on these issues shall be final and binding on the parties until the matter is finally resolved If the arbitrator shall determine that Purchaser is not likely to prevail on the merits of the Claim, then Purchaser shall immediately pay to Seller any amount with respect to which it has asserted a right of offset, together with 6% interest on such amount from the date payment was otherwise due hereunder. If the arbitrator shall determine that Purchaser is likely to prevail on the merits of the Claim, then Purchaser shall be entitled to continue to withhold such amount until the matter is finally resolved. (iii) Any proceeding initiated under this Section 13.8 shall be held in New York City and the fees and costs of the arbitrator shall be born equally by the parties unless the arbitrator determines that a party has acted in bad faith, in which case the arbitrator may require the party which it has determined acted in bad faith to pay the entire costs and until such Escrow Shares are distributed expenses of the arbitrator and the related legal expenses of the other party. (iv) In connection with the arbitration proceeding, the parties shall submit to the NaviCyte Securityholders arbitrator, within sixty (60) days of the arbitrator’s appointment, a written report setting forth its position on the merits of the underlying Claim, together with supporting documentation. The parties shall also supply the arbitrator such additional documentation as provided in Section 1 of this Agreement, SCHEDULE 1 hereto and the Escrow Agreementarbitrator shall request. Without limiting the other provisions of this Agreement or the Escrow Agreement, the NaviCyte Securityholders The arbitrator shall be deemed instructed to have granted render a decision within sixty (60) days of submission of the reports. The parties shall not be entitled to Trega a first-lien security interest in the Escrow Shares as collateral for the recovery by Trega of any and all Damages pursuant to the Offset Right as provided in this Section 6 ("TREGA'S LIEN")discovery.