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 North Carolina Lock Box Agreement is a cash management system used by lenders to streamline the collection and distribution of funds. This agreement serves as a contractual arrangement between lenders and borrowers, ensuring efficient and secure handling of cash flow. In this system, the lender establishes a designated lock box account in North Carolina, typically maintained by a financial institution. Borrowers are instructed to direct their payments to this account rather than making payments directly to the lender. The lock box serves as a centralized location for the receipt of payments, which are then processed and disbursed according to the terms of the agreement. This cash management system offers numerous benefits for lenders. By centralizing the receipt of funds, it increases efficiency and allows for expedited processing of payments. It also reduces the risk of errors or delays in payment handling, ensuring timely access to available funds. Additionally, the lock box agreement helps in consolidating financial data and simplifies reconciliation processes, as all funds flow through a single controlled account. Different types of North Carolina Lock Box Agreement as Cash Management System with Lenders may include: 1. Standard Lock Box Agreement: This is the most common type, where borrowers are instructed to send their payments to a designated lock box account. Payments are processed and disbursed according to the agreed-upon terms. 2. Electronic Lock Box Agreement: In this variation, borrowers have the option to make electronic payments directly into the lock box account. This reduces paper-based transactions and allows for faster processing and access to funds. 3. Controlled Disbursement Lock Box Agreement: This type of agreement provides lenders with early information regarding the available funds in the lock box account. The lender can then make informed decisions regarding the disbursement or investment of these funds. 4. Concentration Banking Lock Box Agreement: This agreement is particularly useful for lenders with many borrowers spread across different regions. It involves establishing multiple lock box accounts in various locations, consolidating the funds into a central concentration account before disbursing them. In conclusion, the North Carolina Lock Box Agreement as a cash management system with lenders provides a secure and efficient method for processing funds. It ensures timely receipt and disbursement of payments while simplifying financial management and reducing risks. Choosing the appropriate type of lock box agreement depends on the needs and preferences of the lender.The North Carolina Lock Box Agreement is a cash management system used by lenders to streamline the collection and distribution of funds. This agreement serves as a contractual arrangement between lenders and borrowers, ensuring efficient and secure handling of cash flow. In this system, the lender establishes a designated lock box account in North Carolina, typically maintained by a financial institution. Borrowers are instructed to direct their payments to this account rather than making payments directly to the lender. The lock box serves as a centralized location for the receipt of payments, which are then processed and disbursed according to the terms of the agreement. This cash management system offers numerous benefits for lenders. By centralizing the receipt of funds, it increases efficiency and allows for expedited processing of payments. It also reduces the risk of errors or delays in payment handling, ensuring timely access to available funds. Additionally, the lock box agreement helps in consolidating financial data and simplifies reconciliation processes, as all funds flow through a single controlled account. Different types of North Carolina Lock Box Agreement as Cash Management System with Lenders may include: 1. Standard Lock Box Agreement: This is the most common type, where borrowers are instructed to send their payments to a designated lock box account. Payments are processed and disbursed according to the agreed-upon terms. 2. Electronic Lock Box Agreement: In this variation, borrowers have the option to make electronic payments directly into the lock box account. This reduces paper-based transactions and allows for faster processing and access to funds. 3. Controlled Disbursement Lock Box Agreement: This type of agreement provides lenders with early information regarding the available funds in the lock box account. The lender can then make informed decisions regarding the disbursement or investment of these funds. 4. Concentration Banking Lock Box Agreement: This agreement is particularly useful for lenders with many borrowers spread across different regions. It involves establishing multiple lock box accounts in various locations, consolidating the funds into a central concentration account before disbursing them. In conclusion, the North Carolina Lock Box Agreement as a cash management system with lenders provides a secure and efficient method for processing funds. It ensures timely receipt and disbursement of payments while simplifying financial management and reducing risks. Choosing the appropriate type of lock box agreement depends on the needs and preferences of the lender.
