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.
Nebraska Lock Box Agreement is a comprehensive cash management system commonly utilized by lenders to streamline financial operations and ensure efficient handling of cash flows. This agreement serves as a secure arrangement between a borrower and a lender, establishing protocols for the processing, monitoring, and control of cash generated from specific collateralized assets or receivables. Keyword: Nebraska Lock Box Agreement The Nebraska Lock Box Agreement provides lenders with greater control and visibility over the borrower's cash flow, reducing the risk of default and enhancing overall financial management. It allows for quick access to funds owed by borrowers, ensuring timely debt servicing and minimizing delays in loan repayment. The agreement also enables lenders to actively monitor account receivables and collateralized assets to protect their interests. Keyword: Cash Management System with Lenders Under the Nebraska Lock Box Agreement, there are different types or variations depending on the specific needs and requirements of the lender and borrower. These variations include: 1. Standard Lock Box Agreement: This form of agreement involves the lender directing the borrower to deposit all incoming payments or cash receipts into a designated lock box account. The lender then gains control over these funds and determines how they are applied, such as towards loan principal and interest payments. 2. Controlled Disbursement Lock Box Agreement: In this type of agreement, the borrower must inform the lender about the expected cash inflows each day. The lender then calculates the amount available for disbursement, reducing uncertainty and facilitating better cash flow management. This variant often benefits borrowers by reducing reliance on short-term borrowing. 3. Collateral Lock Box Agreement: This agreement involves a lender holding the collateral or security provided by the borrower in a designated lock box account. Any cash generated from the collateral is deposited directly into this account, providing protection to the lender until the outstanding debt is repaid. 4. Special Purpose Lock Box Agreement: This type of agreement is used for specific, predefined purposes such as securitization or specific repayment conditions. It allows for streamlined and dedicated cash flows to be directed towards a particular objective, providing clarity and reducing administrative complexities. In conclusion, the Nebraska Lock Box Agreement is a versatile cash management system that offers lenders increased control, transparency, and security over cash flows generated from borrower's assets or receivables. The different types of agreements allow for customization based on the lender's preferences and specific requirements, ensuring an optimized cash management experience.Nebraska Lock Box Agreement is a comprehensive cash management system commonly utilized by lenders to streamline financial operations and ensure efficient handling of cash flows. This agreement serves as a secure arrangement between a borrower and a lender, establishing protocols for the processing, monitoring, and control of cash generated from specific collateralized assets or receivables. Keyword: Nebraska Lock Box Agreement The Nebraska Lock Box Agreement provides lenders with greater control and visibility over the borrower's cash flow, reducing the risk of default and enhancing overall financial management. It allows for quick access to funds owed by borrowers, ensuring timely debt servicing and minimizing delays in loan repayment. The agreement also enables lenders to actively monitor account receivables and collateralized assets to protect their interests. Keyword: Cash Management System with Lenders Under the Nebraska Lock Box Agreement, there are different types or variations depending on the specific needs and requirements of the lender and borrower. These variations include: 1. Standard Lock Box Agreement: This form of agreement involves the lender directing the borrower to deposit all incoming payments or cash receipts into a designated lock box account. The lender then gains control over these funds and determines how they are applied, such as towards loan principal and interest payments. 2. Controlled Disbursement Lock Box Agreement: In this type of agreement, the borrower must inform the lender about the expected cash inflows each day. The lender then calculates the amount available for disbursement, reducing uncertainty and facilitating better cash flow management. This variant often benefits borrowers by reducing reliance on short-term borrowing. 3. Collateral Lock Box Agreement: This agreement involves a lender holding the collateral or security provided by the borrower in a designated lock box account. Any cash generated from the collateral is deposited directly into this account, providing protection to the lender until the outstanding debt is repaid. 4. Special Purpose Lock Box Agreement: This type of agreement is used for specific, predefined purposes such as securitization or specific repayment conditions. It allows for streamlined and dedicated cash flows to be directed towards a particular objective, providing clarity and reducing administrative complexities. In conclusion, the Nebraska Lock Box Agreement is a versatile cash management system that offers lenders increased control, transparency, and security over cash flows generated from borrower's assets or receivables. The different types of agreements allow for customization based on the lender's preferences and specific requirements, ensuring an optimized cash management experience.
