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.
A Texas Lock Box Agreement is a cash management system used by lenders to ensure timely and efficient handling of payments received from borrowers. This agreement is a standard process often utilized by financial institutions in the state of Texas. Keywords: Texas Lock Box Agreement, cash management system, lenders, payments, borrowers. In a Texas Lock Box Agreement, lenders establish a designated lock box with a financial institution, which serves as a centralized location for borrowers to send their payments. This arrangement streamlines the collection and processing of funds, ensuring that lenders receive payments promptly and securely. The primary goal of a Texas Lock Box Agreement is to enhance cash flow management for lenders and optimize the collection of loan repayments. By implementing this system, lenders can effectively track and allocate funds received from borrowers, reducing the risk of payment delays or errors. There are different types of Texas Lock Box Agreements, each tailored to meet specific needs and requirements: 1. Basic Texas Lock Box Agreement: This type involves the creation of a single lock box account, where all borrower payments are deposited. The lender maintains control over this account and manages the cash flow accordingly. 2. Split Texas Lock Box Agreement: In this arrangement, borrower payments are directed to multiple lock box accounts, each designated for a specific purpose. For example, one account may be used for principal payments, while another is allocated for the payment of interest. 3. Subordination Texas Lock Box Agreement: This type of agreement is often utilized in complex financial transactions. It involves the establishment of a lock box account where borrower payments are deposited, but the funds are automatically disbursed to other parties based on predetermined priority. This ensures that different parties involved in the transaction receive their respective payments in the correct order. Overall, a Texas Lock Box Agreement offers lenders greater control over cash management, minimizes the administrative burden associated with collecting payments, and enhances the efficiency and accuracy of fund allocation. With different variations available, lenders can select the type of agreement that best suits their specific needs and aligns with their cash management strategies.A Texas Lock Box Agreement is a cash management system used by lenders to ensure timely and efficient handling of payments received from borrowers. This agreement is a standard process often utilized by financial institutions in the state of Texas. Keywords: Texas Lock Box Agreement, cash management system, lenders, payments, borrowers. In a Texas Lock Box Agreement, lenders establish a designated lock box with a financial institution, which serves as a centralized location for borrowers to send their payments. This arrangement streamlines the collection and processing of funds, ensuring that lenders receive payments promptly and securely. The primary goal of a Texas Lock Box Agreement is to enhance cash flow management for lenders and optimize the collection of loan repayments. By implementing this system, lenders can effectively track and allocate funds received from borrowers, reducing the risk of payment delays or errors. There are different types of Texas Lock Box Agreements, each tailored to meet specific needs and requirements: 1. Basic Texas Lock Box Agreement: This type involves the creation of a single lock box account, where all borrower payments are deposited. The lender maintains control over this account and manages the cash flow accordingly. 2. Split Texas Lock Box Agreement: In this arrangement, borrower payments are directed to multiple lock box accounts, each designated for a specific purpose. For example, one account may be used for principal payments, while another is allocated for the payment of interest. 3. Subordination Texas Lock Box Agreement: This type of agreement is often utilized in complex financial transactions. It involves the establishment of a lock box account where borrower payments are deposited, but the funds are automatically disbursed to other parties based on predetermined priority. This ensures that different parties involved in the transaction receive their respective payments in the correct order. Overall, a Texas Lock Box Agreement offers lenders greater control over cash management, minimizes the administrative burden associated with collecting payments, and enhances the efficiency and accuracy of fund allocation. With different variations available, lenders can select the type of agreement that best suits their specific needs and aligns with their cash management strategies.
