A lock box agreement is a service offered by banks to companies in which the company receives payments by mail to a post office box and the bank picks up the payments several times a day, deposits them into the company's account, and notifies the company of the deposit. This enables the company to put the money to work as soon as it's received, but the amounts must be large in order for the value obtained to exceed the cost of the service.
This lock box agreement is to be used by the collateral agent for a syndicate of banks to receive, control and apply to the Borrower's line of credit, payments made on the debtor's accounts receivable collateral. This agreement when executed, perfects the secured party's security interest in funds in the lock box account by control under Uniform Commercial Code § 9-104(a)(3) by making the agent bank the owner of and party in whose name the account is held. Because the account is controlled by ownership in the name of the secured party, the lock box bank cannot offset claims it has against the debtor against the account as provided in Uniform Commercial Code § 9-340(c). To avoid any doubt on this issue, the lock box bank expressly waives its rights of setoff. On the other hand, the agent bank agrees to indemnify the lock box bank for any unpaid fees or claims concerning the account, in the event the debtor fails to do so.
This form is a generic example that may be referred to when preparing such a form for your particular state. It is for illustrative purposes only. Local laws should be consulted to determine any specific requirements for such a form in a particular jurisdiction.
The Alaska Lock Box Agreement is a cash management system commonly used by lenders to streamline and efficiently manage their loan payments and collections. It involves the establishment of a centralized lock box account in Alaska, which serves as a designated location for receiving and processing borrower payments. This cash management arrangement offers various benefits such as enhanced control, improved cash flow, and simplified payment reconciliation. The Alaska Lock Box Agreement is particularly popular in the lending industry due to the state's unique legal framework and favorable regulations. Lenders can choose from different types of lock box agreements based on their specific requirements and preferences. Here are some notable variations: 1. Standard Alaska Lock Box Agreement: This is the most common type of lock box agreement in which lenders establish a centralized account solely dedicated to receiving borrower payments. It allows for a straightforward and systematic payment processing, ensuring prompt funds availability for the lender. 2. Reverse Alaska Lock Box Agreement: In this type, lenders take advantage of the lock box account to facilitate the collection of loan payments from borrowers directly. The funds received are then used to cover the outstanding loan balances, reducing the risk of default and improving overall cash flow management. 3. Controlled Disbursement Alaska Lock Box Agreement: This type of agreement offers greater control and precision over the payment disbursement process. Lenders receive daily reports listing the payments received in the lock box account, allowing them to accurately anticipate available funds for disbursement purposes. 4. Integrated Alaska Lock Box Agreement: This variant combines the lock box functionality with other cash management systems, such as electronic funds transfers and automated clearinghouse services. It enables lenders to have a comprehensive view of their cash position and facilitates seamless integration with their existing financial systems. The Alaska Lock Box Agreement is widely recognized and utilized as a safe and efficient cash management system, providing lenders with increased financial control and operational efficiency. By leveraging the benefits of this system, lenders can better focus on their core business activities while ensuring timely collection and allocation of funds.The Alaska Lock Box Agreement is a cash management system commonly used by lenders to streamline and efficiently manage their loan payments and collections. It involves the establishment of a centralized lock box account in Alaska, which serves as a designated location for receiving and processing borrower payments. This cash management arrangement offers various benefits such as enhanced control, improved cash flow, and simplified payment reconciliation. The Alaska Lock Box Agreement is particularly popular in the lending industry due to the state's unique legal framework and favorable regulations. Lenders can choose from different types of lock box agreements based on their specific requirements and preferences. Here are some notable variations: 1. Standard Alaska Lock Box Agreement: This is the most common type of lock box agreement in which lenders establish a centralized account solely dedicated to receiving borrower payments. It allows for a straightforward and systematic payment processing, ensuring prompt funds availability for the lender. 2. Reverse Alaska Lock Box Agreement: In this type, lenders take advantage of the lock box account to facilitate the collection of loan payments from borrowers directly. The funds received are then used to cover the outstanding loan balances, reducing the risk of default and improving overall cash flow management. 3. Controlled Disbursement Alaska Lock Box Agreement: This type of agreement offers greater control and precision over the payment disbursement process. Lenders receive daily reports listing the payments received in the lock box account, allowing them to accurately anticipate available funds for disbursement purposes. 4. Integrated Alaska Lock Box Agreement: This variant combines the lock box functionality with other cash management systems, such as electronic funds transfers and automated clearinghouse services. It enables lenders to have a comprehensive view of their cash position and facilitates seamless integration with their existing financial systems. The Alaska Lock Box Agreement is widely recognized and utilized as a safe and efficient cash management system, providing lenders with increased financial control and operational efficiency. By leveraging the benefits of this system, lenders can better focus on their core business activities while ensuring timely collection and allocation of funds.
