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 Franklin Ohio Lock Box Agreement is a cash management system that provides efficient and secure handling of funds between lenders and borrowers. This agreement allows lenders to deposit payments directly into a designated lock box account located in Franklin, Ohio. By utilizing the Franklin Ohio Lock Box Agreement, lenders can streamline the loan repayment process and ensure prompt and accurate recording of payments. This system offers numerous benefits for both lenders and borrowers, including enhanced cash flow management, reduced processing time, and improved transparency. The lock box arrangement involves the establishment of a secure entity in Franklin, Ohio, where lenders deposit loan repayments. The lock box account is typically managed by a third-party financial institution, ensuring stringent security measures are in place to safeguard funds. This arrangement also helps mitigate the risk of mishandling or misappropriation of funds. The Franklin Ohio Lock Box Agreement as a cash management system with lenders can be categorized into different types based on the specific terms and conditions agreed upon between lenders and borrowers. Some common types include: 1. Basic Lock Box Agreement: This type of agreement involves the sole use of the lock box system for loan repayments. Lenders deposit payments directly into the lock box account, and the funds are credited to the borrower's loan balance. 2. Escrow Lock Box Agreement: In this type, lenders may require the establishment of an escrow account in addition to the lock box account. A certain portion of the loan repayment is allocated to the escrow account, which is used for specific purposes such as taxes or insurance payments. 3. Multi-Bank Lock Box Agreement: This arrangement involves multiple financial institutions participating in the lock box system. Lenders may choose to deposit payments into different lock box accounts maintained by various banks, providing flexibility and diversification. 4. Reverse Lock Box Agreement: This unique type of lock box agreement allows the borrower to deposit excess funds beyond the required loan repayment amount into the lock box account. These funds can serve as prepayment towards future loan installments or be held as an interest-bearing reserve. 5. Automated Clearing House (ACH) Lock Box Agreement: In this modernized form of the lock box agreement, lenders transfer funds electronically through the Automated Clearing House network instead of physical checks. This expedites the payment process, reduces manual handling, and improves efficiency. Overall, the Franklin Ohio Lock Box Agreement offers lenders a reliable and secure cash management system, ensuring seamless loan repayment and efficient utilization of funds. Different variations of the agreement cater to specific needs and requirements, allowing flexibility and customization in the cash management process.The Franklin Ohio Lock Box Agreement is a cash management system that provides efficient and secure handling of funds between lenders and borrowers. This agreement allows lenders to deposit payments directly into a designated lock box account located in Franklin, Ohio. By utilizing the Franklin Ohio Lock Box Agreement, lenders can streamline the loan repayment process and ensure prompt and accurate recording of payments. This system offers numerous benefits for both lenders and borrowers, including enhanced cash flow management, reduced processing time, and improved transparency. The lock box arrangement involves the establishment of a secure entity in Franklin, Ohio, where lenders deposit loan repayments. The lock box account is typically managed by a third-party financial institution, ensuring stringent security measures are in place to safeguard funds. This arrangement also helps mitigate the risk of mishandling or misappropriation of funds. The Franklin Ohio Lock Box Agreement as a cash management system with lenders can be categorized into different types based on the specific terms and conditions agreed upon between lenders and borrowers. Some common types include: 1. Basic Lock Box Agreement: This type of agreement involves the sole use of the lock box system for loan repayments. Lenders deposit payments directly into the lock box account, and the funds are credited to the borrower's loan balance. 2. Escrow Lock Box Agreement: In this type, lenders may require the establishment of an escrow account in addition to the lock box account. A certain portion of the loan repayment is allocated to the escrow account, which is used for specific purposes such as taxes or insurance payments. 3. Multi-Bank Lock Box Agreement: This arrangement involves multiple financial institutions participating in the lock box system. Lenders may choose to deposit payments into different lock box accounts maintained by various banks, providing flexibility and diversification. 4. Reverse Lock Box Agreement: This unique type of lock box agreement allows the borrower to deposit excess funds beyond the required loan repayment amount into the lock box account. These funds can serve as prepayment towards future loan installments or be held as an interest-bearing reserve. 5. Automated Clearing House (ACH) Lock Box Agreement: In this modernized form of the lock box agreement, lenders transfer funds electronically through the Automated Clearing House network instead of physical checks. This expedites the payment process, reduces manual handling, and improves efficiency. Overall, the Franklin Ohio Lock Box Agreement offers lenders a reliable and secure cash management system, ensuring seamless loan repayment and efficient utilization of funds. Different variations of the agreement cater to specific needs and requirements, allowing flexibility and customization in the cash management process.
