Locked Box Clause Samples
A Locked Box clause is a mechanism used in mergers and acquisitions to fix the purchase price of a business as of a specific date, known as the "locked box date." After this date, the seller is typically restricted from extracting value from the company, such as through dividends or other payments, until the transaction closes. The clause ensures that any economic benefits or risks arising after the locked box date accrue to the buyer, not the seller. Its core function is to provide price certainty and prevent value leakage between the agreed date and completion of the deal.
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Locked Box. 5.1 Each of the Sellers severally warrants in respect of itself only to the Buyer that, save for Permitted Leakage between the Locked Box Date and the Completion Date:
(a) no Group Company has declared, made or paid any dividend or distribution to that Seller or any of its Affiliates;
(b) no Group Company has made any repayment of principal on any debt or payment of any interest on or other payment in relation to any debt obligation to that Seller or any of its Affiliates;
(c) no Group Company has made any payments, including bonuses or fees (including consulting fees, monitoring fees, directors' fees, licence fees or royalties), charges or compensation to, or granted future benefits to, or transferred assets to, or assumed, indemnified or incurred liabilities for the benefit of that Seller or any of its Affiliates;
(d) no Group Company has made or agreed to make any payments to that Seller or any of its Affiliates in respect of any share capital or other securities of any Group Company being issued, redeemed, purchased or repaid, or any other return of capital;
(e) no management charge or fee of any nature whatsoever has been paid to that Seller or any of its Affiliates by any of the Group Companies and there has been no payment of any management charge, consulting, service or other fee or compensation by any of the Group Companies to that Seller or any of its Affiliates;
(f) no Group Company has forgiven or waived any amount owed to it by that Seller or any of its Affiliates; and
(g) it has not made or entered into any agreement or arrangement (whether conditional or not) or agreed to pay any fees, costs, expenses, Taxation or other amounts relating to any of the matters referred to in this clause 5.1(a) to 5.1(f).
5.2 In the event of any breach by any Seller of any of the warranties in sub-clauses 5.1(a) to 5.1(g), inclusive (including for the avoidance of doubt, any breach after the Completion Date to the extent that it results from an action, omission or agreement made prior to Completion), in relation to that Seller or its Affiliates, that Seller shall pay to the Buyer on demand an amount in cash equal to the amount of any payment or other financial benefit received by it or its Affiliates from the relevant Group Company as a result of such breach.
5.3 No Locked Box Claim may be made against a Seller unless notice of such Locked Box Claim, complying with the provisions of paragraph 3.2 of Schedule 7, is served on that Seller in writing as soon as rea...
Locked Box. Borrower has obtained and shall continue to maintain during the term of this Agreement the post office box at the U.S. Post Office bearing the following address: P▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇, or such other address as Bank may notify Borrower from time to time (the “Locked Box”). Borrower shall notify all of its customers and account debtors to forward all remittances of every kind due Borrower (“Remittances”) to the Locked Box (such notices to be in such form and substance as Bank may require from time to time). Immediately upon receipt thereof, Borrower shall deposit all other proceeds of Receivables or other Loan Collateral into the Locked Box (or into the Special Account, as defined below). Bank shall have sole access to the Locked Box at all times, and Borrower shall take all action necessary to grant Bank such sole access. At no time shall Borrower remove any item from the Locked Box without Bank’s prior written consent, and Borrower shall not notify any customer or account debtor to pay any Remittance to any other place or address without Bank’s prior written consent. If Borrower should neglect or refuse to notify any customer or account debtor to pay any Remittance to the Locked Box, Bank shall be entitled to make such notification. Borrower hereby grants to Bank an irrevocable power of attorney, coupled with an interest, to take in Borrower’s name all action necessary (a) to grant Bank sole access to the Locked Box, (b) to contact account debtors to pay any Remittance to the Locked Box in the event that any such account debtor is not paying any such Remittance to the Locked Box, (c) to contact account debtors for any reason upon the occurrence of an Event of Default, and (d) to endorse each Remittance delivered to the Locked Box for deposit to the Special Account.
Locked Box. In the event that Completion occurs in accordance with clause 3.13.2, the Vendor covenants to the Purchaser that between the Completion Accounts Date and the Completion Date (inclusive) (save to the extent it constitutes Permitted Leakage or save to the extent the relevant matter will be or has been taken into account in the Completion Accounts):
3.14.1 no dividend or other distribution of profits or assets (or any payments in lieu of any dividend or other distribution of profits or assets) will be declared, paid or made by any Group Company or would be treated as having been paid or made by a Group Company other than to another Group Company, whether in cash or in kind;
3.14.2 no payments will be made by or on behalf of a Group Company to or for the benefit of a Related Party;
3.14.3 no share capital of a Group Company will be redeemed, repurchased, reduced, waived or repaid or result in a payment or an agreement or obligation to make a payment to a member of any Related Party;
3.14.4 no amounts owed to a Group Company by a Related Party will be reduced, waived or forgiven;
3.14.5 no management, advisory, monitoring or other shareholder or director’s fees, charges or employee or director bonuses (including transaction bonuses) or payments of a similar nature will be paid by or on behalf of a Group Company to or for the benefit of a Related Party;
3.14.6 no changes will be made to the terms of any borrowing between a Related Party and a Group Company;
3.14.7 no indebtedness of any kind (including all accrued Interest thereon) due or owing to (or for the benefit of) any Related Party by (or on behalf of) any Group Company will be created, incurred, increased, repaid, reduced or waived save for balances arising from the ordinary course of business under agreements entered into on or before the date of this Agreement;
3.14.8 no liability, obligation or indemnity will be assumed, indemnified or incurred by any Group Company for the benefit of any Related Party;
3.14.9 there will be no change in the terms of any indebtedness of any Group Company;
3.14.10 no sale, transfer, surrender or other disposal (whether in whole or in part) or waiver of any assets, rights or other benefits or value of a Group Company will be made to any Related Party;
3.14.11 no professional fees, expenses or other costs in connection with the transaction contemplated by the Transaction Documents will be paid by or on behalf of a Group Company or for the benefit of a Related Party;
3.14.1...
Locked Box. The Sellers, severally and not jointly, represent, warrant and undertake, to Parent that:
(i) there has been no Leakage at any time from the Locked-Box Date up to and including the Agreement Date, other than Permitted Leakage or as set forth on Schedule 6.9(a)(i) of the Seller Disclosure Letter; and
(ii) there shall be no Leakage at any time from the Agreement Date up to and including the Closing, other than Permitted Leakage or as set forth on Schedule 6.9(a)(ii) of the Seller Disclosure Letter. following:
Locked Box. 6.1 The Seller covenants that during the period from the Accounts Date and to the date of this Agreement, and save as permitted by Schedule 4 (Permitted Leakage):
(A) no member of the Group has declared, authorised, made or paid any dividend or distribution to any member of the Retained Group;
(B) no member of the Group has transferred any asset to, or assumed, indemnified or incurred any liability for the benefit of any member of the Retained Group;
(C) no member of the Group has waived or released in favour of any member of the Retained Group any liability to pay, nor has any member of the Retained Group failed to pay when due and payable, any sum or obligation due by any such member of the Retained Group to any member of the Group;
(D) no payment, management charge or fee has been or will be levied by any member of the Retained Group against any member of the Group, and there has been no payment by any member of the Group to any member of the Retained Group, other than any payment made pursuant to a trading contract entered into in the ordinary course and on arm’s length terms (including, for this purpose, payment of any Ordinary Trading Items);
(E) no Group recharges by and between members of the Retained Group and members of the Group have been made other than any payment made pursuant to a trading contract entered into in the ordinary course and on arm’s length terms (including, for this purpose, payment of any Ordinary Trading Items); and
(F) no member of the Group has made or entered into any agreement or arrangement to give effect to any of the matters referred to in sub-clauses 6.1(A) to (E) above. Table of Contents
6.2 To the extent that any of the events set out in sub-clause 6.1 have occurred, the Seller covenants to pay the Purchaser on an after-Tax basis an amount equal to such payments, dividends, distributions, other returns of capital, the value of any asset transferred, liability assumed or incurred (or in respect of which an indemnity has been given) or loss or liability incurred or sum or obligation waived, or which will be paid, returned, transferred, assumed, waived or incurred pursuant to an agreement or arrangement to do any of the foregoing.
6.3 In this clause 6, references to the “Group” are to be interpreted as references to the Company, to each Existing Subsidiary and not (for the avoidance of doubt) to the EXL Pune SPV, the Chennai SPV or NTrance Customer Services Private Limited.
6.4 Any payment made by the Seller pursuant to...
Locked Box. 9.1 Each of the Sellers (in respect of itself only) severally covenants to the Purchaser that in the period (if any) from the HSR Satisfaction Date up to and including the date of Completion:
(a) neither it, nor any of its affiliates or any other person connected with it, will receive or benefit from any amount of Leakage; and
(b) no arrangement or agreement will be made or entered into that will result in it, any of its affiliates or any other person connected with it, receiving any Leakage, provided that references to persons connected with a Seller in this Clause 9.1 and Clause 9.2 shall also include, if a person is a partner of or investor, shareholder or unit holder in that Seller or a connected person of that Seller and a payment is made to such person in such capacity, that person to the extent of and in relation to that payment.
9.2 In the event of any Leakage which is prohibited by Clause 9.1, and subject to Completion having occurred, the relevant Seller severally covenants to the Purchaser to pay to the Purchaser (or to its order) on demand by the Purchaser an amount in cash equal to (without double counting) the aggregate of the amount or value of such Leakage received by it, its affiliate or by any persons connected with it or in respect of which it or any person connected with it has benefited.
9.3 The liability of the Sellers pursuant to Clause 9.1 shall terminate on the date falling 6 months after Completion unless prior to such date the Purchaser has notified the Sellers of a claim in relation to breach by the Sellers of the undertaking set out in Clause 9.1, setting out the amount of such Leakage together with reasonable evidence thereof (provided that, in respect of Taxation on Leakage, the Purchaser shall be required only to set out a reasonable estimate of the amount of such Taxation on Leakage), in which case, in relation to any relevant breaches notified, the Sellers shall remain liable until any relevant claims in respect of this Clause 9 have been satisfied, settled or withdrawn; and provided that the liability of the Seller in respect of any such claim shall terminate unless proceedings in respect of that claim have been commenced by being both properly issued and validly served within 6 months after Completion.
9.4 The Sellers shall, in good faith, use reasonable endeavours to procure that all reasonable enquires made by the Purchaser and the Purchaser’s Advisers in respect of the accounting records of the Group for the period fr...
Locked Box. Since April 1, 2018 until the Closing Date (included), there has been no Leakage other than a Permitted Leakage.
Locked Box. 3.4.1 Subject to the provisions of this Section 3.4:
3.4.1.1 Sellers undertake jointly and severally to pay to Buyer an amount equal to any Leakage received by, or originating in favor of, Sellers or any of their Affiliates (other than the Companies) from and including the Locked Box Date to Closing. In each case, if such amount is determined prior to Closing, it shall be deducted from the Purchase Price as paid to the Escrow Account.
3.4.2 Buyer may serve on Sellers a Leakage Notice at any time up to seven (7) months after Closing. Within twenty (20) Business Days after the date of receipt of any Leakage Notice, the respective Seller (or Sellers as appropriate) may either: (i) accept in writing the amount of Leakage specified in the Leakage Notice in whole or in part (such accepted amount, the “Agreed Leakage Amount”); or (ii) deliver a Leakage Dispute Notice (including in respect of the not accepted amount from the previous subparagraph (i)). Sellers shall pay to Buyer an amount equal to any Leakage: (A) by deduction from the Purchase Price payable at Closing if the Agreed Leakage Amount is determined before Closing; or (B) within 10 Business Days of the Leakage Amount being otherwise determined (whether as an Agreed Leakage Amount or otherwise), in accordance with this Section 3.4. If the respective Seller (or Sellers as appropriate) does not deliver a Leakage Dispute Notice within the relevant period referred to in this Section 3.4.2, then the Leakage specified in the Leakage Notice shall be deemed to be an Agreed Leakage Amount.
3.4.3 If the respective Seller (or Sellers as appropriate) delivers a Leakage Dispute Notice within the relevant period referred to in Section 3.4.2, then:
3.4.3.1 Buyer shall make immediately available, and Buyer shall procure that the respective Company makes immediately available, to the respective Seller such information, records or documents in its possession and control which Buyer in its sole discretion deems reasonably requested by the respective Seller for the purpose of reviewing the items identified in the Leakage Notice;
3.4.3.2 the respective Seller and Buyer shall seek to negotiate in good faith for a period of twenty (20) Business Days as of delivery of the Leakage Dispute Notice to agree the Leakage Amount;
3.4.3.3 if the Leakage Dispute Notice is delivered before Closing, an amount equal to the Leakage which is disputed in the Leakage Dispute Notice (the “Leakage Escrow Amount”) shall be held in the Escrow Acc...
Locked Box. 5.1 For the purposes of this Agreement, “Leakage” means the following:
Locked Box. 4.1 Each Seller (in respect of itself only and not in respect of any other Seller) severally covenants to pay to the Purchaser (or any member of the Group as the Purchaser directs) an amount in cash equal to any Leakage received by it or him (or any Connected Person of such Seller) within 15 Business Days of receipt of a valid written notice from the Purchaser in accordance with clause 4.2.
4.2 Except in the case of fraud, no Seller shall be liable under clause 4.1 unless written notice of such Leakage has been notified to that Seller (specifying the precise nature of the Leakage and the amount due from him) on or before the date which is six (6) months after the Completion Date setting out reasonable details of the Leakage (including the matter or thing giving rise to the relevant Leakage, together with the amount repayable by the relevant Seller(s)).
4.3 The maximum aggregate liability of each Seller under this clause 4 (Locked Box) shall not in any circumstances exceed the amount of Leakage actually received by that Seller or Connected Person of such Seller and the Purchaser shall have no other remedy for any Leakage other than as set out in this clause 4 (Locked Box).