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.
An Alameda California Lock Box Agreement is a type of cash management system that is commonly used by lenders. It involves an agreement between a borrower and a lender, where the borrower agrees to deposit their cash proceeds into a designated lock box account located in Alameda, California. The purpose of this agreement is to provide the lender with more control and security over the borrower's cash flow. The Alameda California Lock Box Agreement serves as a mechanism for the lender to effectively monitor and manage the borrower's cash flow. The borrower is required to route all cash payments, such as customer payments, rental income, or other receivables, directly to the lock box account. This enables the lender to have immediate access to these funds, ensuring timely and efficient handling of loan payments or other obligations. There are different types of Alameda California Lock Box Agreements that can be tailored to meet the specific needs and preferences of the lender and borrower. Some variations of this agreement include: 1. Concentration Account: This type of lock box agreement allows the borrower to deposit all cash proceeds into the lock box account, consolidating funds from various sources. The lender can then use these funds to offset the borrower's outstanding loan balance. 2. Sweep Account: In this arrangement, the lender has the ability to automatically "sweep" funds from the lock box account into the borrower's loan account on designated dates. This ensures that excess cash is used to reduce the borrower's outstanding balance, minimizing interest costs. 3. Collateral Account: In certain cases, the lock box account may serve as a collateral account. The borrower deposits cash or other liquid assets into the account as a form of security for the loan. This provides the lender with additional assurance and safeguards against default. Overall, an Alameda California Lock Box Agreement as a Cash Management System with Lenders offers an efficient and secure way for lenders to manage cash flows and protect their interests. By utilizing such an arrangement, borrowers can demonstrate their commitment to meeting financial obligations promptly while lenders can effectively monitor and manage cash inflows while ensuring seamless loan repayments.An Alameda California Lock Box Agreement is a type of cash management system that is commonly used by lenders. It involves an agreement between a borrower and a lender, where the borrower agrees to deposit their cash proceeds into a designated lock box account located in Alameda, California. The purpose of this agreement is to provide the lender with more control and security over the borrower's cash flow. The Alameda California Lock Box Agreement serves as a mechanism for the lender to effectively monitor and manage the borrower's cash flow. The borrower is required to route all cash payments, such as customer payments, rental income, or other receivables, directly to the lock box account. This enables the lender to have immediate access to these funds, ensuring timely and efficient handling of loan payments or other obligations. There are different types of Alameda California Lock Box Agreements that can be tailored to meet the specific needs and preferences of the lender and borrower. Some variations of this agreement include: 1. Concentration Account: This type of lock box agreement allows the borrower to deposit all cash proceeds into the lock box account, consolidating funds from various sources. The lender can then use these funds to offset the borrower's outstanding loan balance. 2. Sweep Account: In this arrangement, the lender has the ability to automatically "sweep" funds from the lock box account into the borrower's loan account on designated dates. This ensures that excess cash is used to reduce the borrower's outstanding balance, minimizing interest costs. 3. Collateral Account: In certain cases, the lock box account may serve as a collateral account. The borrower deposits cash or other liquid assets into the account as a form of security for the loan. This provides the lender with additional assurance and safeguards against default. Overall, an Alameda California Lock Box Agreement as a Cash Management System with Lenders offers an efficient and secure way for lenders to manage cash flows and protect their interests. By utilizing such an arrangement, borrowers can demonstrate their commitment to meeting financial obligations promptly while lenders can effectively monitor and manage cash inflows while ensuring seamless loan repayments.
