Legal Offsetting Agreement

LEGAL OFFSETTING AGREEMENT

This Legal Offsetting Agreement (the Agreement) is made as of by and between Party A: , a/an organized under the laws of with principal place of business at ; and Party B: , a/an organized under the laws of with principal place of business at .

RECITALS

WHEREAS, the parties have certain mutual obligations, accounts, claims, or indebtedness arising from transactions, contracts, invoices, and other dealings between them (collectively, the Mutual Obligations); and

WHEREAS, the parties desire to establish a binding contractual procedure by which amounts owing by one party to the other may be offset or netted against amounts owing by the other party, and to set out the method, timing, notice, and remedies applicable to such offsetting; and

WHEREAS, the parties intend that the rights of setoff and offset provided in this Agreement be in addition to, and shall not prejudice, any other rights or remedies each party may have at law or in equity.

NOW, THEREFORE

In consideration of the mutual covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

As used in this Agreement, the following terms have the following meanings:

(a) "Claim" means any right to payment, reimbursement, refund, setoff, counterclaim or other obligation arising under or in connection with any contract, invoice, tort, statute, common law claim or other basis, whether matured or unmatured, absolute or contingent.

(b) "Offset" or "Setoff" means the lawful reduction, netting or extinguishment of an obligation of one party by applying an amount that is owed to that party by the other party.

2. RIGHT TO OFFSET

Subject to the terms and procedures of this Agreement, each party shall have the unilateral right to effect an Offset against any Mutual Obligation owed by such party to the other party by providing written notice in accordance with the Notices section. An Offset may be effected only to the extent and in the amounts described in the notice delivered pursuant to Section 3.

3. CALCULATION; NOTICE; TIMING

(a) Calculation. The party seeking to effect an Offset (the Claiming Party) shall calculate the net amount of its Claim(s) in reasonable detail, identifying each underlying obligation, invoice or claim, the relevant contract or invoice number where available, the date such Claim arose, and the asserted dollar amount. The Claiming Party shall append to the Notice a computation and copies of any invoices, statements or other supporting documentation reasonably available.

(b) Notice. To effect an Offset, the Claiming Party shall deliver written notice to the other party in accordance with the Notices section at least days prior to the proposed date of offset, stating the amount proposed to be offset, the basis for the Claim, and the date on which the offset will be applied.

(c) Timing. Offsets shall be applied on the date set forth in the Notice, provided no timely dispute in accordance with Section 4 has been raised. If a dispute is timely asserted, the parties shall continue to perform their payment obligations except as expressly permitted under Section 6.

4. DISPUTES

(a) Good Faith Resolution. If the notified party disputes in good faith any Claim set forth in a Notice, it shall notify the Claiming Party within days after receipt of the Notice, identifying the basis for the dispute and any amounts it concedes. The parties shall use commercially reasonable efforts to resolve the dispute expeditiously.

(b) Escrow or Security. If resolution is not achieved within days, the parties may agree to submit the dispute to binding arbitration or to the appointment of an independent accounting expert. Pending final resolution, the parties may agree to place disputed amounts into an escrow or to provide other security as the parties mutually agree.

5. NETTING; PAYMENT

(a) Netting. Following the application of any permitted Offsets, the parties shall determine the net amount owing from one party to the other. The party owing the net balance shall pay such amount within days of the netting date, unless otherwise agreed in writing.

(b) Interest and Collection. Any unpaid net balance shall accrue interest at the rate of % per annum from the due date until paid, or at the maximum rate permitted by law, whichever is less. The prevailing party in any action to collect unpaid amounts shall be entitled to recover reasonable attorneys' fees and costs.

6. SECURITY; APPLICATION OF OFFSET

(a) Security Interest. To the extent permitted by law and agreed by the parties in writing, the Claiming Party may seek a lien or security interest in collateral to secure disputed or undisputed Claims; provided that no security interest will be created solely by virtue of this Agreement absent a separate security agreement.

(b) Application. When an Offset is effected, the offset amount shall be applied first to any fees, costs, and interest, then to principal amounts, unless the parties agree otherwise in writing.

7. REPRESENTATIONS AND WARRANTIES

Each party represents and warrants to the other that: (a) it has the full corporate or individual power and authority to enter into and perform its obligations under this Agreement; (b) this Agreement constitutes a legal, valid and binding obligation enforceable in accordance with its terms; and (c) the execution and delivery of this Agreement and the performance of its obligations hereunder do not violate any material agreement or law applicable to such party.

8. COVENANTS

Each party covenants that, so long as any obligation remains outstanding under this Agreement, it will not assign, transfer, or otherwise dispose of any Claims subject to an intended Offset except in accordance with this Agreement without the prior written consent of the other party.

9. INDEMNIFICATION

Each party shall indemnify, defend and hold harmless the other party from and against any and all liabilities, losses, damages, costs and expenses (including reasonable attorneys' fees) resulting from a breach of any representation, warranty or covenant contained in this Agreement or from any negligent or willful act or omission relating to the calculation or application of an Offset, except to the extent caused by the gross negligence or willful misconduct of the indemnified party.

10. DEFAULT; REMEDIES

Upon an event of default by a party (including failure to pay any net balance when due), the non-defaulting party shall have all rights and remedies available at law or in equity, including immediate application of any available Offsets, pursuit of collection, and pursuit of injunctive relief where appropriate. The exercise of any remedy shall be without prejudice to the right to pursue any other remedy.

11. CONFIDENTIALITY

The parties agree that notices, calculations, supporting documentation and other information exchanged under this Agreement shall be treated as confidential and shall not be disclosed to third parties except (a) to the extent required by law or legal process, (b) to professional advisors on a confidential basis, or (c) as otherwise agreed in writing.

12. NOTICES

All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and delivered to the addresses set forth below (or to such other address as a party may designate by notice in accordance with this Section) and shall be deemed delivered upon personal delivery, certified mail (return receipt requested), or next-business-day courier service.

13. AMENDMENTS; WAIVER

No amendment, modification or waiver of any provision of this Agreement shall be effective unless made in a written instrument signed by both parties. No failure or delay by a party in exercising any right or remedy shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any further exercise of that or any other right or remedy.

14. COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic image or PDF shall be effective as originals for all purposes.

15. GOVERNING LAW; VENUE

This Agreement shall be governed by and construed in accordance with the laws of without regard to conflict of law principles. The parties submit to the exclusive jurisdiction of the courts located in such jurisdiction for the resolution of disputes arising under or relating to this Agreement.

16. ENTIRE AGREEMENT; SEVERABILITY

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral or written negotiations, understandings and agreements. If any provision of this Agreement is adjudicated to be invalid or unenforceable, such provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect.

ADDITIONAL PROVISIONS

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