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.
Chicago Illinois Lock Box Agreement is a cash management system utilized by lenders to streamline the handling of borrower's funds. The agreement involves the use of a lock box, a secure box controlled by the lender, where the borrower's incoming payments are directed. This efficient and secure system offers numerous advantages for both lenders and borrowers. One type of Chicago Illinois Lock Box Agreement is the Standard Lock Box Agreement. Under this agreement, the borrower's payments, such as loan repayments or rent, are directed to a designated lock box address. The lender then collects and processes these payments, ensures timely updates to the borrower's account, and applies the funds according to the loan terms. This agreement provides lenders with enhanced control over the flow of funds and allows for seamless cash management. Another type is the Reverse Lock Box Agreement. In this arrangement, the borrower receives payments from customers or tenants, which are then deposited into the lock box controlled by the lender. The lender then deducts the necessary amounts, such as loan repayments or service fees, before forwarding the remaining funds to the borrower. This form of lock box agreement ensures the lender's security by having direct control over the payment processing, minimizing the risk of non-payment or misappropriation of funds. The Chicago Illinois Lock Box Agreement as a Cash Management System with Lenders is particularly beneficial for lenders dealing with large volumes of payments. By consolidating the collection and processing of funds into one secure location, lenders can optimize their operational efficiency and reduce handling costs. Additionally, the system enables lenders to quickly identify and address any discrepancies or issues in payments, ensuring accurate and up-to-date accounting. Keywords: Chicago Illinois Lock Box Agreement, cash management system, lenders, borrowers, secure, streamlined, incoming payments, lock box address, timely updates, loan terms, enhanced control, seamless cash management, Reverse Lock Box Agreement, customers, tenants, risk mitigation, large volumes, operational efficiency, handling costs, discrepancies, accurate accounting.Chicago Illinois Lock Box Agreement is a cash management system utilized by lenders to streamline the handling of borrower's funds. The agreement involves the use of a lock box, a secure box controlled by the lender, where the borrower's incoming payments are directed. This efficient and secure system offers numerous advantages for both lenders and borrowers. One type of Chicago Illinois Lock Box Agreement is the Standard Lock Box Agreement. Under this agreement, the borrower's payments, such as loan repayments or rent, are directed to a designated lock box address. The lender then collects and processes these payments, ensures timely updates to the borrower's account, and applies the funds according to the loan terms. This agreement provides lenders with enhanced control over the flow of funds and allows for seamless cash management. Another type is the Reverse Lock Box Agreement. In this arrangement, the borrower receives payments from customers or tenants, which are then deposited into the lock box controlled by the lender. The lender then deducts the necessary amounts, such as loan repayments or service fees, before forwarding the remaining funds to the borrower. This form of lock box agreement ensures the lender's security by having direct control over the payment processing, minimizing the risk of non-payment or misappropriation of funds. The Chicago Illinois Lock Box Agreement as a Cash Management System with Lenders is particularly beneficial for lenders dealing with large volumes of payments. By consolidating the collection and processing of funds into one secure location, lenders can optimize their operational efficiency and reduce handling costs. Additionally, the system enables lenders to quickly identify and address any discrepancies or issues in payments, ensuring accurate and up-to-date accounting. Keywords: Chicago Illinois Lock Box Agreement, cash management system, lenders, borrowers, secure, streamlined, incoming payments, lock box address, timely updates, loan terms, enhanced control, seamless cash management, Reverse Lock Box Agreement, customers, tenants, risk mitigation, large volumes, operational efficiency, handling costs, discrepancies, accurate accounting.
