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 Minnesota Lock Box Agreement, as a cash management system with lenders, is a contractual agreement between a lender and a borrower in the state of Minnesota. This agreement outlines the process of handling funds received by the borrower from its customers or clients. In this cash management system, the borrower agrees to establish a lock box account in Minnesota with a designated bank. The funds received by the borrower's customers are physically sent to this lock box address instead of being deposited directly into the borrower's bank account. Keywords: Minnesota Lock Box Agreement, cash management system, lenders, borrower, contractual agreement, funds, customers, lock box account, designated bank, physical address, direct deposit. There are different types of Minnesota Lock Box Agreements as Cash Management Systems with Lenders: 1. Basic Lock Box Agreement: This agreement establishes a simple system where the borrower's customers send their payments to a specific lock box address in Minnesota. The designated bank receives and processes these payments, allowing for efficient cash management. 2. Automated Lock Box Agreement: This type of agreement involves the use of advanced technologies and automation to streamline the cash management process. The designated bank provides electronic scanning and processing services, enabling quicker and more accurate processing of payments received at the lock box address. 3. Escrow Lock Box Agreement: In situations where the borrower needs to segregate funds for a specific purpose, an escrow lock box agreement can be established. This agreement ensures that the funds received at the lock box address are held separately and can only be used for the specified purpose, as agreed upon by both the lender and borrower. 4. Remote Lock Box Agreement: This agreement enables the borrower to establish a lock box address outside the state of Minnesota. The designated bank works with a partner bank in the desired location to create a remote lock box account. This allows for greater flexibility in managing cash flow and may be beneficial for borrowers with a diverse customer base. Keywords: Basic Lock Box Agreement, Automated Lock Box Agreement, Escrow Lock Box Agreement, Remote Lock Box Agreement, cash management system, lenders, borrower, contractual agreement, funds, customers, lock box account, designated bank, remote location.
