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 Oregon Lock Box Agreement is a cash management system with lenders that allows for efficient financial transactions and secure handling of funds. It is a contractual arrangement between a borrower (typically a business or organization) and a lender (such as a financial institution or government agency) that streamlines the processing and collection of funds. Under an Oregon Lock Box Agreement, the borrower authorizes the lender to receive and process incoming payments on its behalf. The lender sets up a designated lock box facility where the borrower's customers, tenants, or other payers can send their payments. This lock box serves as a centralized location for collecting payments, which are then processed, recorded, and deposited by the lender. The Oregon Lock Box Agreement offers various benefits to both borrowers and lenders. For borrowers, it provides enhanced cash management capabilities, improved efficiency in payment collection, and reduced administrative burden. By outsourcing payment processing to the lender, borrowers can focus on their core business activities and gain quicker access to funds. Lenders, on the other hand, benefit from increased control over the borrower's cash flow, improved monitoring of payment collections, and reduced risks associated with payment handling. They can efficiently allocate funds to support the borrower's loan repayments or other obligations, ensuring timely and accurate financial operations. Several types of Oregon Lock Box Agreements exist, tailored to specific needs and circumstances. These may include: 1. Standard Lock Box Agreement: This is the most common type of lock box arrangement, where the lender receives payments, processes them, and deposits the funds into the borrower's account. This agreement typically involves a single lock box facility for payment collection. 2. Multiple Location Lock Box Agreement: In scenarios where the borrower operates in multiple locations, this agreement facilitates the establishment of lock boxes at different geographical locations. Each lock box receives payments specific to its location, allowing for regional payment processing and localized fund allocation. 3. Customized Lock Box Agreement: This type of agreement allows for tailored cash management solutions, addressing unique requirements of the borrower and lender. It may involve additional services such as electronic payment processing, automated reporting, and specialized fund allocation strategies. Overall, the Oregon Lock Box Agreement serves as a reliable and secure cash management system for borrowers and lenders alike. It fosters efficient payment processing, improved cash flow management, and reduces administrative complexities, enabling businesses to focus on their core operations while ensuring smooth financial transactions.
