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 Rhode Island Lock Box Agreement is a cash management system designed to streamline and secure the processing of payments for lenders. This agreement serves as a mechanism for borrowers to direct their payments directly to a designated lock box account, where they are then collected and processed by the lender. The main purpose of a Rhode Island Lock Box Agreement is to enhance operational efficiency, reduce processing costs, and minimize the risk of mishandling or misappropriation of funds. By utilizing this system, lenders can effectively and accurately track incoming payments, reconcile accounts, and allocate funds accordingly. There are various types of Rhode Island Lock Box Agreements that can be established based on the specific needs and preferences of the lender. Some common variations include: 1. Basic Lock Box Agreement: This type of agreement involves straightforward payment processing, where all payments received at the designated lock box account are deposited directly into the lender's account. This system requires minimal customization and is suitable for lenders with a consistent volume of payments. 2. Advanced Lock Box Agreement: This agreement entails a more sophisticated cash management system, offering additional features such as electronic payment processing, real-time reporting, and automatic account reconciliation. It is typically chosen by lenders who handle a high volume of payments and require advanced functionality to streamline their operations. 3. Virtual Lock Box Agreement: In this type of agreement, physical checks and documents are replaced with electronic equivalents. Borrowers submit payments electronically, which are then routed to the lender's virtual lock box account for processing. Virtual lock boxes provide greater convenience and speed, making them an ideal choice for lenders focused on digital transformation. 4. Escrow Lock Box Agreement: This agreement is specifically designed for escrow accounts, where funds are held by a neutral third party until certain conditions are met. Escrow lock box agreements ensure the secure handling of funds and facilitate timely disbursements to appropriate parties. Overall, the Rhode Island Lock Box Agreement serves as an efficient and secure cash management system for lenders, offering various customization options to meet specific requirements. By implementing this system, lenders can streamline their payment processing, reduce manual errors, and enhance overall financial control.The Rhode Island Lock Box Agreement is a cash management system designed to streamline and secure the processing of payments for lenders. This agreement serves as a mechanism for borrowers to direct their payments directly to a designated lock box account, where they are then collected and processed by the lender. The main purpose of a Rhode Island Lock Box Agreement is to enhance operational efficiency, reduce processing costs, and minimize the risk of mishandling or misappropriation of funds. By utilizing this system, lenders can effectively and accurately track incoming payments, reconcile accounts, and allocate funds accordingly. There are various types of Rhode Island Lock Box Agreements that can be established based on the specific needs and preferences of the lender. Some common variations include: 1. Basic Lock Box Agreement: This type of agreement involves straightforward payment processing, where all payments received at the designated lock box account are deposited directly into the lender's account. This system requires minimal customization and is suitable for lenders with a consistent volume of payments. 2. Advanced Lock Box Agreement: This agreement entails a more sophisticated cash management system, offering additional features such as electronic payment processing, real-time reporting, and automatic account reconciliation. It is typically chosen by lenders who handle a high volume of payments and require advanced functionality to streamline their operations. 3. Virtual Lock Box Agreement: In this type of agreement, physical checks and documents are replaced with electronic equivalents. Borrowers submit payments electronically, which are then routed to the lender's virtual lock box account for processing. Virtual lock boxes provide greater convenience and speed, making them an ideal choice for lenders focused on digital transformation. 4. Escrow Lock Box Agreement: This agreement is specifically designed for escrow accounts, where funds are held by a neutral third party until certain conditions are met. Escrow lock box agreements ensure the secure handling of funds and facilitate timely disbursements to appropriate parties. Overall, the Rhode Island Lock Box Agreement serves as an efficient and secure cash management system for lenders, offering various customization options to meet specific requirements. By implementing this system, lenders can streamline their payment processing, reduce manual errors, and enhance overall financial control.
