Indemnification Addendum (APA) Template

Indemnification Addendum (APA) Template

This Indemnification Addendum (the “Addendum”) is made as of [Addendum Date] and relates to the Asset Purchase Agreement described below.

1. Parties and Reference to Asset Purchase Agreement

Buyer:
Full Legal Name: [Buyer Full Legal Name]
Business Name (if different): [Buyer Business Name]
Jurisdiction of Organization: [Jurisdiction]
Entity Type: [Entity Type]
Address: [Buyer Address]

Seller:
Full Legal Name: [Seller Full Legal Name]
Business Name (if different): [Seller Business Name]
Jurisdiction of Organization: [Jurisdiction]
Entity Type: [Entity Type]
Address: [Seller Address]

Other Parties (if any): [Names and Details of Other Parties]

Asset Purchase Agreement:
Title: [Title of Asset Purchase Agreement]
Date: [APA Date]
Parties: [List Parties to APA]

This Addendum supplements and, to the extent expressly stated, amends or replaces the indemnification provisions of the Asset Purchase Agreement (the “Agreement”). Capitalized terms used in this Addendum and not defined here have the meanings given in the Agreement.

2. Purpose and Relationship to Agreement

2.1 Purpose

The parties are entering into this Addendum to clarify and adjust the indemnification, limitation of liability, and claims procedures under the Agreement, including [Survival / Baskets / Caps / Claim Notice and Defense].

2.2 Controlling Provisions

If there is any conflict between this Addendum and the indemnification and related limitation of liability provisions of the Agreement, the terms of this Addendum will control to the extent of the conflict, unless the parties state otherwise in Section 9.

3. Indemnity by Seller

3.1 General Indemnity

Subject to the limitations in this Addendum and the Agreement, from and after the Closing, Seller will indemnify, defend, and hold harmless Buyer and its Affiliates and their respective directors, officers, employees, and agents (collectively, the “Buyer Indemnified Parties”) from and against Losses arising from:

a) any breach of Seller’s representations and warranties in the Agreement or in any certificate delivered by or on behalf of Seller under the Agreement;

b) any breach or non-fulfillment of any covenant or agreement of Seller in the Agreement or this Addendum;

c) any Excluded Liabilities and Excluded Assets, as defined in the Agreement;

d) any Taxes allocated to Seller under the Agreement; and

e) any other matters expressly stated in the Agreement or in this Addendum as being subject to Seller’s indemnity.

3.2 Specific Carve-Outs or Additions

Any specific additional indemnity obligations of Seller (for example, environmental, litigation, or regulatory matters) may be listed here:

• [Seller Special Indemnity 1 Description]

• [Seller Special Indemnity 2 Description]

4. Indemnity by Buyer

4.1 General Indemnity

Subject to the limitations in this Addendum and the Agreement, from and after the Closing, Buyer will indemnify, defend, and hold harmless Seller and its Affiliates and their respective directors, officers, employees, and agents (collectively, the “Seller Indemnified Parties”) from and against Losses arising from:

a) any breach of Buyer’s representations and warranties in the Agreement or in any certificate delivered by or on behalf of Buyer under the Agreement;

b) any breach or non-fulfillment of any covenant or agreement of Buyer in the Agreement or this Addendum;

c) any Assumed Liabilities, as defined in the Agreement; and

d) any other matters expressly stated in the Agreement or in this Addendum as being subject to Buyer’s indemnity.

4.2 Specific Carve-Outs or Additions

Any specific additional indemnity obligations of Buyer may be listed here:

• [Buyer Special Indemnity 1 Description]

• [Buyer Special Indemnity 2 Description]

5. Limitations on Indemnification (Baskets, Caps, and Survival)

5.1 Survival Periods

Unless otherwise specified below, the indemnification obligations in Sections 3 and 4 will survive the Closing and remain in effect for the following periods:

• General representations and warranties: [Survival Period, e.g., “18 months after Closing Date”].

• Fundamental representations (such as organization, authority, capitalization, and title to assets): [Survival Period or “Until expiration of applicable statute of limitations”].

• Tax matters: [Survival Period or “Expiration of applicable statute of limitations plus [Number] months”].

• Covenants and agreements: [Survival Period or “In accordance with their express terms”].

Any claim for indemnification must be asserted by written notice on or before the applicable survival expiration date.

5.2 Deductible or Basket

Except for the categories listed as exceptions below, Seller will not be liable for indemnification under Section 3.1(a) and Buyer will not be liable under Section 4.1(a) unless and until the aggregate amount of indemnifiable Losses of the applicable type exceeds the “Basket Amount”:

Basket Amount: [Basket Amount and Currency]

Once the Basket Amount is exceeded, the indemnifying party will be liable for:

☐ Only the Losses in excess of the Basket Amount.
☐ The full amount of Losses (first-dollar coverage), once the Basket Amount is exceeded.

5.3 Items Not Subject to Basket

The basket in Section 5.2 does not apply to:

• Fraud or intentional misrepresentation;

• Breaches of fundamental representations and warranties;

• Specified special indemnities listed in this Addendum or the Agreement;

• [Any other agreed exceptions].

5.4 Liability Cap

Except as provided in Section 5.5, the maximum aggregate liability of each indemnifying party under the Agreement and this Addendum for the indemnified matters covered by the cap will be:

Cap Amount: [Cap Amount and Currency]

The cap may be applied differently to different categories of claims if the parties agree, for example:

• General representations and warranties: [Cap Amount or % of Purchase Price].

• Fundamental representations and warranties: [Higher Cap Amount or “Purchase Price”].

• Tax matters and specified special indemnities: [Cap Amount or “No Cap, subject to statute of limitations”].

5.5 Exclusions from Cap

The liability cap in Section 5.4 does not limit liability for:

• Fraud or intentional misrepresentation;

• Willful breach of covenants;

• Any obligations expressly stated as uncapped in the Agreement or this Addendum;

• [Other agreed exclusions].

6. Third-Party Claims Procedure

6.1 Notice of Third-Party Claims

If an Indemnified Party receives written notice of any claim, demand, action, or proceeding brought by a third party that may give rise to indemnification (a “Third-Party Claim”), the Indemnified Party will give prompt written notice to the party from whom indemnification is sought (the “Indemnifying Party”).

Such notice will include, to the extent reasonably available:

• Basic details of the Third-Party Claim;

• The basis for potential indemnification; and

• Copies of relevant documents or pleadings.

Failure to give prompt notice will not relieve the Indemnifying Party of its obligations except to the extent it is actually prejudiced by the delay.

6.2 Defense of Third-Party Claims

Subject to any applicable conflicts of interest or coverage issues:

a) The Indemnifying Party may elect, by written notice within [Number] days after receiving notice of the Third-Party Claim, to assume the defense of the Third-Party Claim with counsel reasonably acceptable to the Indemnified Party.

b) If the Indemnifying Party assumes the defense, the Indemnified Party may participate in the defense at its own expense, and will reasonably cooperate in providing information and access to records.

c) If the Indemnifying Party does not timely elect to assume the defense, or if the Indemnifying Party is not entitled to control the defense under this Addendum, the Indemnified Party may defend the Third-Party Claim, and the Indemnifying Party will remain responsible for indemnifiable Losses.

6.3 Settlement

The Indemnifying Party may not settle any Third-Party Claim without the Indemnified Party’s prior written consent if the settlement:

• Imposes any non-monetary obligation on the Indemnified Party;

• Does not include a full and unconditional release of the Indemnified Party; or

• Admits wrongdoing by the Indemnified Party.

The Indemnified Party may not settle any Third-Party Claim for which it seeks indemnification without the Indemnifying Party’s prior written consent, which will not be unreasonably withheld, conditioned, or delayed.

7. Direct Claims (Non-Third-Party)

For any claim for indemnification that does not involve a Third-Party Claim (a “Direct Claim”), the Indemnified Party will give written notice to the Indemnifying Party describing the nature of the claim and the estimated amount of Losses, to the extent reasonably determinable at the time.

The parties will attempt to resolve Direct Claims in good faith. If they cannot resolve the claim within [Number] days after the Indemnifying Party receives notice, the Indemnified Party may pursue any remedies available under the Agreement, this Addendum, or applicable law, subject to the limitations set out in Section 5.

8. Exclusions, Double Recovery, and Other Limitations

8.1 Exclusions

No party will be liable for any Losses to the extent they:

• Are expressly excluded under the Agreement or this Addendum;

• Have already been taken into account in a post-closing purchase price adjustment, to avoid double counting; or

• Are covered by insurance actually recovered by the Indemnified Party, in which case indemnity will only cover any remaining uninsured portion.

8.2 Mitigation

Each Indemnified Party will use commercially reasonable efforts required by applicable law to mitigate Losses for which it seeks indemnification.

8.3 No Double Recovery

No Indemnified Party will recover the same Loss twice under different provisions of the Agreement, this Addendum, or any related document.

9. Miscellaneous

9.1 No Other Changes

Except as expressly set out in this Addendum, the Agreement remains unchanged and in full force and effect.

9.2 Order of Precedence

If there is any conflict between this Addendum and the Agreement with respect to indemnification, limitation of liability, or claims procedures, this Addendum will govern to the extent of the conflict, unless the Agreement is later amended in writing to provide otherwise.

9.3 Governing Law

This Addendum is governed by the same governing law specified in the Agreement, unless the parties specify a different governing law here: [Alternative Governing Law, if any].

9.4 Counterparts and Electronic Signatures

This Addendum may be signed in counterparts, each of which will be considered an original, and all of which together form one instrument. Signatures delivered by electronic means will have the same effect as original signatures.

Signatures

Buyer:
Signature: _______________________________
Printed Name: [Buyer Signatory Name]
Title: [Buyer Signatory Title]
Date: [Date Signed by Buyer]

Seller:
Signature: _______________________________
Printed Name: [Seller Signatory Name]
Title: [Seller Signatory Title]
Date: [Date Signed by Seller]

Other Party (if applicable):
Signature: _______________________________
Printed Name: [Other Party Signatory Name]
Title: [Other Party Signatory Title]
Date: [Date Signed by Other Party]

Witnesses (If Used)

Witness 1:
Signature: _______________________________
Printed Name: [Witness 1 Full Legal Name]
Address: [Witness 1 Address]
Date: [Date Signed by Witness 1]

Witness 2 (if required):
Signature: _______________________________
Printed Name: [Witness 2 Full Legal Name]
Address: [Witness 2 Address]
Date: [Date Signed by Witness 2]

Notary Acknowledgment (If Required)

State/Province of [State/Province]
County of [County]

On [Notarization Date], before me, [Notary Full Name], a Notary Public, personally appeared [Buyer Signatory Name] and [Seller Signatory Name] [and any Other Party Signatory Name], who proved their identities on the basis of satisfactory evidence and acknowledged that they executed this Indemnification Addendum (APA) for the purposes stated in it.

Notary Public Signature: _______________________________
Notary Public Printed Name: [Notary Full Name]
My Commission Expires: [Commission Expiration Date]
Notary Seal: ☐