Indemnification Addendum (APA) Template

INDEMNIFICATION ADDENDUM (APA) TEMPLATE FAQ

What is an Indemnification Addendum to an Asset Purchase Agreement (APA)?

An Indemnification Addendum is a separate document that modifies, supplements, or restates the indemnification provisions of an existing Asset Purchase Agreement. It lets the buyer and seller adjust who covers which losses, how long indemnities last, and how claims are handled.

When would parties use an Indemnification Addendum?

Parties might use this addendum when they renegotiate risk allocation after signing the original APA, when new facts arise during closing, when they want to add specific caps or baskets, or when they need more detailed claim procedures than the initial APA provided.

What does an Indemnification Addendum usually cover?

A clear indemnification addendum typically addresses: indemnity by seller and buyer, types of losses covered, limitations like baskets, caps, and survival periods, claim notice and defense procedures, treatment of third-party claims, exclusions, and how this addendum interacts with the main APA.

Does an indemnification addendum replace the APA’s indemnification section?

It can, but not always. Some addenda state that they fully replace the existing indemnification section, while others simply supplement or modify it. This template includes flexible language you can adapt to either approach, depending on what the parties agree.

What are “basket” and “cap” in indemnification?

A “basket” is a threshold amount of losses that must be reached before indemnification is owed, while a “cap” is a maximum aggregate amount that an indemnifying party will pay. Many APAs use baskets and caps to limit indemnity exposure, especially for general representations and warranties.

Can AI Lawyer help me customize this Indemnification Addendum (APA)?

Yes. AI Lawyer can help you fill in this Indemnification Addendum template with your APA references, party names, baskets, caps, survival periods, and claim procedures so you have a clear, organized document ready for review and signature.