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 Montana Lock Box Agreement is a cash management system designed to streamline financial operations between lenders and borrowers. Through this agreement, lenders and borrowers can establish a secure mechanism for collecting and managing funds. The lock box system acts as an intermediary, ensuring efficient and transparent transactions. By utilizing the Montana Lock Box Agreement, lenders can create multiple types of cash management systems based on their specific needs. These different types include: 1. Basic Lock Box Agreement: This type allows lenders to consolidate various borrower payments into a single account. The lock box acts as a centralized collection point, streamlining the payment process and minimizing the risk of errors or delays. Lenders can efficiently track incoming funds and allocate them to the appropriate accounts. 2. Automated Clearing House (ACH) Lock Box Agreement: This agreement enables lenders to receive payments electronically through the ACH network. Borrowers can authorize automatic deductions from their accounts, eliminating the need for paper checks. The ACH lock box agreement offers greater convenience and speed in processing payments. 3. Remote Deposit Capture (RDC) Lock Box Agreement: This type of agreement allows lenders to receive payments via scanned checks directly from borrowers. Borrowers can use a remote deposit capture scanner or mobile app to take a picture of the check and transmit it electronically. This agreement eliminates the need for physical transportation of checks and reduces the risk of lost or stolen paper checks. 4. Online Payment Portal Lock Box Agreement: This agreement provides borrowers with a secure online platform to make payments electronically. Lenders can offer a user-friendly portal where borrowers can log in, access their accounts, and make payments using various payment methods such as credit cards or electronic fund transfers. The online payment portal lock box agreement simplifies payment processes, enhances security, and improves financial visibility. Through these various types of Montana Lock Box Agreements, lenders and borrowers can benefit from enhanced cash management efficiency, reduced processing time, improved accuracy, and enhanced financial security. This system provides a win-win solution for lenders and borrowers by streamlining financial transactions and minimizing potential risks.
