Indemnification
1. Definitions. For purposes of this Clause:
a. Affiliate means, with respect to a Party, any entity that directly or indirectly controls, is controlled by, or is under common control with such Party.
b. Claim means any third-party claim, demand, action, suit, investigation, arbitration, or proceeding, whether at law or in equity and whether asserted or threatened.
c. Law means all applicable laws, statutes, regulations, ordinances, rules, codes, and orders of any governmental authority with jurisdiction.
d. Losses means all losses, damages, liabilities, deficiencies, fines, penalties, judgments, settlements, interest, and reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees and costs of investigation, enforcement, and defense), but excluding punitive or exemplary damages except to the extent payable to a third party in connection with a Claim or otherwise required by Law or arising from fraud or willful misconduct of the indemnified party.
e. Taxes means all taxes, duties, levies, and similar charges, together with any related interest, penalties, or additions thereto, imposed by a governmental authority.
2. Indemnity by Seller. To the fullest extent permitted by Law, Seller shall indemnify, defend, and hold harmless Buyer, its Affiliates, and their respective directors, officers, employees, and agents (collectively, Buyer Indemnitees) from and against any and all Losses arising out of or relating to:
a. any breach by Seller of any representation, warranty, covenant, or obligation in the Agreement;
b. any Claim alleging bodily injury, death, or damage to tangible property to the extent caused by a defect in the goods or services supplied by Seller, or by Seller’s negligent acts or omissions or willful misconduct;
c. any Claim alleging infringement or misappropriation of any patent, copyright, trademark, trade secret, or other intellectual property right by the goods, services, or related documentation supplied by Seller, except to the extent such Claim arises from Buyer’s specifications that necessarily and unavoidably cause the infringement, or from a combination or use with other items not supplied or authorized in writing by Seller where the infringement would not have occurred but for such combination or use;
d. Seller’s violation of applicable Law in connection with the performance of the Agreement;
e. Seller Taxes.
3. Indemnity by Buyer. To the fullest extent permitted by Law, Buyer shall indemnify, defend, and hold harmless Seller, its Affiliates, and their respective directors, officers, employees, and agents (collectively, Seller Indemnitees) from and against any and all Losses arising out of or relating to:
a. any breach by Buyer of any representation, warranty, covenant, or obligation in the Agreement;
b. any Claim to the extent caused by Buyer’s specifications, instructions, or designs, or Buyer’s combination, modification, integration, or use of the goods or services other than as supplied by Seller and in accordance with Seller’s written instructions or documentation, where the Claim would not have arisen but for such specifications, instructions, designs, combination, modification, integration, or use;
c. Buyer’s negligent acts or omissions or willful misconduct;
d. Buyer Taxes.
4. Procedure for Third-Party Claims.
a. Notice. The party seeking indemnification (Indemnified Party) shall give the indemnifying party (Indemnifying Party) prompt written notice of any Claim for which indemnification may be sought, specifying in reasonable detail the nature of the Claim and the basis of the request for indemnification. Failure to give prompt notice shall not relieve the Indemnifying Party of its obligations except to the extent it is materially prejudiced thereby.
b. Defense and Control. The Indemnifying Party shall, upon written notice to the Indemnified Party, assume the defense of the Claim with counsel reasonably satisfactory to the Indemnified Party and shall keep the Indemnified Party reasonably informed of material developments. The Indemnified Party may participate in the defense at its own expense; provided, however, that if (i) the Indemnifying Party fails to assume or diligently prosecute the defense within a reasonable time, (ii) a conflict of interest exists between the parties that cannot be cured by ethical wall, or (iii) the Claim seeks non-monetary relief that could materially adversely affect the Indemnified Party, then the Indemnified Party may assume the defense, and the Indemnifying Party shall reimburse reasonable and documented defense costs.
c. Settlement. The Indemnifying Party shall not settle any Claim without the prior written consent of the Indemnified Party if such settlement (i) does not include a full and unconditional release of the Indemnified Party from all liability with respect to the Claim, (ii) imposes injunctive or other non-monetary relief, admission of liability, or ongoing obligations on the Indemnified Party, or (iii) adversely affects the Indemnified Party’s rights or business. The Indemnified Party shall not settle any Claim for which it seeks indemnification without the Indemnifying Party’s prior written consent (not to be unreasonably withheld, conditioned, or delayed), except where the Indemnifying Party has failed to assume the defense as required.
5. Direct Claims. With respect to any claim for indemnification that does not involve a third-party Claim, the Indemnified Party shall deliver written notice to the Indemnifying Party describing the claim in reasonable detail and the amount or a good-faith estimate thereof. The Indemnifying Party shall respond in writing within [30] days stating whether it accepts or disputes the claim and, if accepted, shall pay the undisputed amount within [30] days of acceptance. Any disputed portion shall be resolved pursuant to the dispute resolution provisions of the Agreement.
6. Additional IP Infringement Remedies. In addition to its indemnity obligations under Section 2(c), and without limiting Buyer’s remedies, if any of the goods or services are, or in Seller’s reasonable opinion are likely to be, the subject of an IP infringement Claim, Seller shall, at its expense and option: (i) procure for Buyer the right to continue using the affected goods or services; (ii) modify or replace them so that they become non-infringing while materially preserving equivalent functionality and performance; or (iii) if neither (i) nor (ii) is commercially reasonable, accept return of the affected goods or terminate the affected services and refund to Buyer the applicable purchase price or prepaid fees, less reasonable depreciation for goods used in accordance with the Agreement. This Section shall not apply to the extent the Claim arises from the circumstances described in Section 3(b).
7. Limitations; Exclusions; Mitigation.
a. Indemnity Caps. The aggregate liability of Seller for indemnification under Section 2(a), excluding fraud, willful misconduct, or intentional breach, shall not exceed [the purchase price paid under the Agreement for the goods or services giving rise to the claim]/[USD [•]]. The foregoing cap shall not apply to liabilities under Sections 2(b) (bodily injury/death/property damage), 2(c) (IP infringement), or to fraud, willful misconduct, gross negligence, or Seller Taxes. The aggregate liability of Buyer for indemnification under Section 3(a), excluding fraud, willful misconduct, or intentional breach, shall not exceed [USD [•]]; provided that the cap shall not apply to Buyer’s obligations under Sections 3(c) or Buyer Taxes, or to fraud, willful misconduct, or gross negligence.
b. Basket/Threshold. No party shall be liable for indemnification for breaches of representations or warranties until the aggregate Losses exceed [USD [•]] in the aggregate, after which the Indemnifying Party shall be liable for all Losses from the first dollar/[only the excess over such amount], provided that this Section does not apply to fraud, willful misconduct, or claims under Sections 2(b), 2(c), 3(c), or Taxes.
c. Exclusions. Neither party shall be liable for special, indirect, incidental, or consequential damages, or for loss of profits, revenue, or goodwill, except to the extent (i) awarded to a third party in connection with a Claim for which indemnification is owed, (ii) arising from a party’s breach of confidentiality, data security, or IP obligations, or (iii) resulting from fraud, willful misconduct, or gross negligence.
d. Mitigation. Each Indemnified Party shall use commercially reasonable efforts to mitigate Losses to the extent required by applicable Law.
e. No Double Recovery. The Indemnified Party shall not recover duplicative amounts for the same Loss under multiple provisions of the Agreement or otherwise.
8. Subrogation. Upon payment of any indemnified Loss, the Indemnifying Party shall be subrogated, to the extent of such payment, to any rights the Indemnified Party may have against any third parties with respect to such Loss, and the Indemnified Party shall reasonably cooperate with the Indemnifying Party in pursuing such rights.
9. Exclusive Remedy; Cumulative Rights. The indemnities in this Clause are [the sole and exclusive remedy for third-party Claims arising out of the subject matter of the Agreement]/[in addition to, and not in limitation of, any other rights or remedies available at law, in equity, or under the Agreement], in each case to the extent permitted by Law. Nothing in this Clause limits either party’s liability for fraud, willful misconduct, or gross negligence.
10. Insurance. Each party shall, at its own expense, maintain insurance coverage of types and in amounts customary for similarly situated entities and sufficient to support its obligations under this Clause; provided that insurance shall not limit a party’s liability except as expressly stated herein.
11. Survival. This Clause shall survive termination or expiration of the Agreement for the applicable statute of limitations period or [•] years from such termination or expiration, whichever is longer, with respect to matters arising from acts, omissions, or breaches occurring during the term.
12. Construction. For purposes of this Clause, (a) references to the Agreement include any schedules, statements of work, or purchase orders issued thereunder; and (b) nothing herein shall be construed to expand or limit any warranty periods or claim notice periods elsewhere in the Agreement except as expressly stated. All indemnification obligations are subject to and shall be enforceable to the fullest extent permitted by applicable Law.
