Indemnification Clause
(Combination Basket)

Summary

This form of indemnification clause provides for indemnification by each of the seller and buyer for breaches of representations and warranties, covenants and other itemized occurrences. The indemnification is subject to a combination basket: a threshold amount that must be reached for indemnification recovery, after which the indemnified party may recover only losses in excess of a different, lower amount. This clause includes practical guidance, drafting notes, and optional clauses. Indemnification may also be limited by a pure deductible, where once the threshold amount is reached, the indemnified party may recover losses in excess of the threshold amount or a "tipping basket" where, once the threshold amount is reached, the indemnified party may recover all losses from the first dollar. For an example of these clauses, see Indemnification Clause (Deductible) and Indemnification Clause (Tipping Basket), respectively. Combination baskets are much less common than either other type of indemnification threshold, appearing in less than 5% of transactions. Indemnification may be subject to other limitations such as de minimis thresholds and caps, examples of which are included in this clause. Note that the numbering in this clause begins at Section . Typically the first section in an Indemnification Article will be the Survival Clause. These indemnification provisions are commonly followed with Sandbagging Clauses, as applicable. For further discussion of indemnification provisions, see Indemnification Provisions in Private Acquisition Agreements.