South Dakota Lock Box Agreement as Cash Management System with Lenders

State:
Multi-State
Control #:
US-03367BG
Format:
Word; 
Rich Text
Instant download

Description

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.

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  • Preview Lock Box Agreement as Cash Management System with Lenders
  • Preview Lock Box Agreement as Cash Management System with Lenders
  • Preview Lock Box Agreement as Cash Management System with Lenders
  • Preview Lock Box Agreement as Cash Management System with Lenders
  • Preview Lock Box Agreement as Cash Management System with Lenders
  • Preview Lock Box Agreement as Cash Management System with Lenders
  • Preview Lock Box Agreement as Cash Management System with Lenders

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FAQ

A bank lockbox is a service for streamlining accounts receivable management. Customers mail payments to a secure P.O. box controlled by the bank, instead of the business's office. The bank collects, opens, and processes the payments daily, then deposits the funds into the business's account.

What is a Lockbox System? A lockbox is a bank-operated mailing address to which a company directs its customers to send their payments. The bank opens the incoming mail, deposits all received funds in the company's bank account, and scans the payments and any remittance information.

Definition for : Lockbox system Under a lockbox system, the creditor asks its debtors to send their payments directly to a post office box that is emptied regularly by the creditor's bank. The funds are immediately paid into the banking system, without first being processed by the creditor's accounting department.

A lockbox is a bank-operated mailing address or post office (PO) box that a business can use to collect payments from its customers. Therefore, lockbox banking is the commercial service banks offer that ensures customer payment receipts are sent to this secure location and processed ingly.

How it works: Soft lockboxes primarily work one of two ways: (A) All rents from the property are deposited or paid directly into a Lender-controlled account (aka lockbox/restricted account) and are subsequently swept to the borrower; or (B) Rents are deposited in the restricted account and then are swept to a separate ...

Definition for : Lockbox system Under a lockbox system, the creditor asks its debtors to send their payments directly to a post office box that is emptied regularly by the creditor's bank. The funds are immediately paid into the banking system, without first being processed by the creditor's accounting department.

Security interests in cash deposits can be perfected through the use of a ?lock box.? Under this arrangement, a borrower and a third party agree that payments on contracts entered into by a borrower are paid to a bank account which is in the possession and control of the lender.

A: A Post Office (PO) box is a general way for anyone ?business or customer, to receive mail away from their home or office address. But a lockbox is a specific type of PO box for commercial banking. In this case, the bank not only collects checks sent to the box but also processes them.

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South Dakota Lock Box Agreement as Cash Management System with Lenders