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 District of Columbia Lock Box Agreement is a comprehensive cash management system established between lenders and the District of Columbia government. This agreement serves as a mechanism to ensure efficient and secure handling of funds between the two parties. Under this cash management system, lenders agree to deposit loan payments and other related funds directly into designated lock box accounts held with trusted financial institutions. These lock box accounts are centrally managed by the District of Columbia government, providing them with real-time access to funds and enabling better control over cash flow. The District of Columbia Lock Box Agreement offers several types, each catering to specific requirements and objectives of lenders. These types include: 1. Standard Lock Box Agreement: This agreement involves lenders depositing loan payments into a centralized lock box account. The District of Columbia government then has immediate access to these funds for various purposes, such as debt servicing or capital projects. 2. Escrow Lock Box Agreement: This type focuses on collecting and managing escrow funds for lenders. These funds are typically used to cover tax and insurance payments associated with the underlying loans. By utilizing an escrow lock box account, the District of Columbia government ensures that these specific funds are allocated appropriately and disbursed in a timely manner. 3. Collateral Lock Box Agreement: In situations where loans are secured by collateral, lenders may opt for a collateral lock box agreement. This agreement allows the District of Columbia government to monitor and manage collateral-linked payments, ensuring that any revenue generated is used to cover loan obligations promptly. The District of Columbia Lock Box Agreement as a cash management system with lenders offers numerous benefits for both parties. Lenders enjoy the convenience of automated cash handling, minimizing the risk of late or missed payments. Simultaneously, the District of Columbia government gains improved cash flow visibility, enhanced fund allocation control, and streamlined financial operations. Keywords: District of Columbia, Lock Box Agreement, cash management system, lenders, loan payments, funds, secure handling, designated lock box accounts, financial institutions, real-time access, control over cash flow, specific requirements, objectives, Standard Lock Box Agreement, Escrow Lock Box Agreement, collateral, collateral-linked payments, automated cash handling, late payments, missed payments, cash flow visibility, fund allocation control, financial operations.
