Remittance Basis Loans Clause Samples
The Remittance Basis Loans clause defines the terms under which loans are provided to individuals who are taxed on a remittance basis, typically non-domiciled residents in a jurisdiction like the UK. This clause outlines how loan proceeds can be used, the requirements for repayment, and the tax implications if the loaned funds are brought into the country. Its core function is to ensure compliance with tax regulations by clarifying how such loans are treated for tax purposes, thereby helping both lenders and borrowers avoid unintended tax liabilities.
Remittance Basis Loans. Borrower agrees that, with respect to indebtedness of Borrower in excess of Five Thousand Dollars ($5,000) hereunder and under the Loans, it shall at its sole expense establish and maintain: (i) a United States Post Office lock box (the "Lock Box"), to which Bank shall have exclusive access and control. Borrower expressly authorizes Bank, from time to time, to remove contents from the Lock Box, for disposition in accordance with this Agreement. Borrower agrees to notify all account debtors and other parties obligated to Borrower that all payments made to Borrower (other than payments by electronic funds transfer) shall be remitted, for the credit of Borrower, to the Lock Box, and Borrower shall include a like statement on all invoices; and (ii) a non-interest bearing deposit account with Bank which shall be titled as designated by Bank (the "Cash Collateral Account") to which Bank shall have exclusive access and control. Borrower agrees to notify all account debtors and other parties obligated to Borrower that all payments made to Borrower by electronic funds transfer shall be remitted to the Cash Collateral Account, and Borrower, at Bank's request, shall include a like statement on all invoices. Borrower shall execute all documents and authorizations as required by Bank to establish and maintain the Lock Box and the Cash Collateral Account. Borrower acknowledges that all items or amounts which are remitted to the Lock Box, to the Cash Collateral Account, or otherwise delivered by or for the benefit of Borrower to Bank on account of partial or full payment of, or with respect to, any Collateral shall, at Bank's option, (i) be applied to the payment of the indebtedness of Borrower hereunder after three days' clearance, whether then due or not, in such order or at such time of application as Bank may determine in its sole discretion, or, (ii) be deposited to the Cash Collateral Account.
Remittance Basis Loans. 6.1 So long as any Event of Default exists, at the sole discretion of Agent, the Indebtedness may be put on a Remittance Basis, and the following provisions shall be applicable:
(a) Company will: (i) establish (at its own expense) and maintain at all times lockbox arrangements; (ii) notify account debtors to make payments of receivables only to the lockbox accounts established and maintained pursuant to such arrangements; (iii) continue to transfer (or cause to be transferred) all funds deposited into such lockbox accounts directly into the Company's account or, into accounts designated by the Agent at such bank but under the sole dominion and control of the Agent; and (iv) direct each bank (each, a "lockbox bank") that maintains such lockboxes to transfer to an account designated by the Agent under the sole dominion and control of the Agent on a daily basis, all funds deposited from time to time in the accounts of the Company maintained with the lockbox bank, and to confirm to the Agent that the Company has no access to the funds in any such account.
(b) All items or accounts which are delivered to Agent pursuant to subparagraph (a) above, or any other amount payable with respect to, any of the Collateral shall, at Agent's option, be applied to payment of the Indebtedness whether then due or not, in such order of applications as Agent may determine or, at Agent's option, shall be deposited to the credit of a deposit account (herein called the "Assignee Deposit Account") of Company with Agent, as security for payment of the Indebtedness. Company shall have no right to withdraw any funds deposited in the Assignee Deposit Account. Agent may, from time to time, in its discretion, and shall upon request of Company made not more than once in any week, apply all or any of the balance then representing collected funds in the Assignee Deposit Account, toward payment of the Indebtedness, whether or not then due, in such order of application as Agent may determine, and from time to time, in its discretion, may release all or any of such balance to Company.
(c) Whenever Company obtains possession (by return, repossession or otherwise) of any goods, the sale or lease of which by Company shall have given rise to any of the Collateral, it will (unless Agent otherwise consents in writing) segregate, label and hold such goods as subject to the security interest of Agent hereunder, and will, at its own expense, dispose of such goods in such manner as Agent may from time to...