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. 4.1 Each of the Sellers warrants severally and in respect of itself only to the Buyer that, except for Permitted Leakage, during the period from and excluding the Locked Box Date up to and including Completion:
(a) none of the Companies has declared, authorised, paid or made to or for the benefit of that Seller or any Connected Person of that Seller any dividend, distribution or return of capital;
(b) none of the Companies has transferred or surrendered any asset to, or granted any Encumbrance over any asset in favour or for the benefit of, or assumed, indemnified or incurred any obligation or liability for the benefit of, that Seller or any Connected Person of that Seller;
(c) none of the Companies has waived, released or forgiven in favour of that Seller or any Connected Person of that Seller any sum or obligation due by that Seller or any Connected Person of that Seller to any of the Companies and neither that Seller nor any Connected Person of that Seller has failed to pay when due any sum due to any of the Companies;
(d) no payment, management charge or fee of any nature has been levied by, or for the benefit of, that Seller or any Connected Person of that Seller against any of the Companies and there has been no payment of any nature including any payment of any management fee, service fee or similar fee or compensation by any of the Companies to, or for the benefit of, that Seller or any Connected Person of that Seller;
(e) no liabilities have been paid or incurred by any of the Companies in respect of the transactions contemplated by this Agreement, including any finders’ fees, bonuses, brokerages or other commissions, or any advisers’ fees, costs or expenses;
(f) none of the Companies has made any repayment of principal on any of the Loan Notes for the benefit of that Seller or any Connected Person of that Seller; and
(g) neither that Seller nor any Connected Person of that Seller has made or entered into any agreement or arrangement to give effect to any of the matters referred to in clauses 4.1(a) to 4.1(f).
4.2 The occurrence of any of the events set out in clause 4.1 at or before Completion but after the Locked Box Date will constitute an incident of “Leakage”.
4.3 In the event of any breach of any of the warranties in clauses 4.1(a) to 4.1(g) (inclusive), each Seller shall pay to the Buyer within 10 Business Days of receipt of a written notice from the Buyer setting out in reasonable detail the nature of the Leakage an amount in cash equal to...
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. 5.1 Each Minority Seller in respect of itself and its Connected Persons:
(a) severally warrants only to the Buyer that, during the period from (but excluding) the Locked Box Date up to and including the date of this Agreement, neither it nor any of its Connected Persons has received or benefitted (directly or indirectly) from any Leakage, other than Permitted Leakage; and
(b) severally undertakes only to the Buyer that, during the period from (but excluding) the date of this Agreement up to and including the Completion Date, neither it nor any of its Connected Persons shall receive or benefit (directly or indirectly) from any Leakage, other than Permitted Leakage.
5.2 In the event of any breach of warranty or undertaking in clause 5.1 (but always subject to clause 5.3):
(a) each Minority Seller shall pay to the Buyer on demand (on a pound for pound basis) an amount equal to the cash or cash equivalent value of the benefit received (directly or indirectly), or deemed to have been received pursuant to clause 5.6, by such Minority Seller or its Connected Persons as a result of such Leakage, less any Minority Pre-Completion Leakage Amount in respect of such Leakage that is deducted from such Minority Seller’s Relevant Portion in accordance with clause 3.4; save that,
(b) where limb (g) of Leakage applies, or limbs (l) and (m) to the extent they apply solely in respect of limb (g), each Minority Seller shall pay to the Buyer on demand (on a pound for pound basis) an amount equal to such proportion of the aggregate amount of any such Leakage (less any Minority Pre-Completion Leakage Amount in respect of such Leakage that is deducted in accordance with clause 3.1) as is equal to the proportion which the amount of Consideration payable to such Minority Seller at Completion bears to the total consideration payable by the Buyer for the sale of the Shares and Majority Shares at Completion and completion of the Majority SPA.
5.3 No Minority Seller shall be liable for any Leakage Claim unless written notice of the Leakage Claim, specifying in reasonable detail (as far as they are known to the Buyer) the specific matter in respect of which the Leakage Claim is made and, as far as is reasonably practicable, the Buyer’s calculation of the amount claimed, is served on the relevant Minority Seller on or before the date which is six months following the Completion Date, provided that a failure to provide such detail shall not of itself invalidate a written notice of such Lea...
Locked Box. Since April 1, 2018 until the Closing Date (included), there has been no Leakage other than a Permitted Leakage.
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).
Locked Box. 5.1 For the purposes of this Agreement, “Leakage” means the following:
Locked Box. Each Seller undertakes to pay to the Buyer on demand an amount in cash equal to the amount of any Leakage received by such Seller or any member of such Seller’s Seller Group during the Locked Box Period. The maximum liability of each Seller in respect of a Locked Box Claim shall not exceed the amount of Leakage received by such Seller and members of such Seller’s Seller Group giving rise to such Locked Box Claim, provided that nothing in this Section 2.3 shall have the effect of limiting, restricting or excluding the liability of any Seller in respect of a Locked Box Claim arising as a result of such Seller’s fraud. The Buyer shall raise the Locked Box Claim no later than twelve (12) months following the Closing Date. Unless the Sellers agree otherwise in writing, if the Buyer fails to make the Locked Box Claim within the aforementioned period, it shall be deemed as the Locked Box Claim has been waived by the Buyer.
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. 004600-0228-14943-Active.18252126.10
4.1 Each of the Sellers (in respect of itself only) severally warrants, covenants and undertakes to the Buyer that in the period from (and excluding) the Locked Box Date up to (and including) the Completion Date (save to the extent comprising a Permitted Leakage):