Lockbox Agreement. Multistate Completion Guide. July 2009

Transcription

1 Lockbox Agreement Multistate Completion Guide July 2009

2 Table of Contents INTRODUCTION... 1 Warranties and Limitations... 2 Warranties and Limitations for this Guide... 2 Warranties and Limitations for the Form(s) That Are the Subject of this Guide... 3 Other Important Terms for the Use of this Guide... 3 Lockbox Agreement (Lockbox-Agre)... 7 Form PM-LOCKBOX 7/2009 ii

3 INTRODUCTION USE OF THIS GUIDE. Use of this guide will constitute an express acceptance of all the terms set forth in the "Introduction," "Warranties and Limitations" and "Other Important Terms for the Use of this Guide" sections of this guide. Forms and Purpose. This guide is intended to assist credit unions that have purchased the following copyrighted Wolters Kluwer Financial Services form: Lockbox Agreement [Lockbox-Agre] Usage. The form listed above should only be used for the purpose for which it is intended. Format. In this guide, we attempt to answer the most common questions and problems you might confront in completing this form. This guide is not intended to address state specific laws. The entire form is reproduced at the beginning of this guide. Each separate item of the form which receives separate discussion in the guide is numbered. The explanatory text begins with a simple statement of what should ordinarily be filled in on the line being discussed. In some cases, this simple explanation is followed by a more detailed explanation and cross-references to other portions of the form which need to be considered with the item under discussion. Form Specific. This guide is written solely for use with the above referenced form. The existence of varying state laws means that some of the terms discussed may not be applicable in your state. Additionally, there may be provisions in the form developed for your state which are not discussed in this guide. Feel free to call us at our toll-free number ( ) if you need information about specific sections. This guide is not intended to be used with any other forms. Private Attorneys. In developing this guide, the form to which it pertains, and all of our other technical forms, we have interpreted many statutes, cases and regulations. We strongly encourage you to seek the advice of your own attorney concerning the utility of this guide, the legal sufficiency of the form to which it pertains, and all of our other technical forms. Any legal references in this guide are merely to assist you and your counsel in your review of our form and this guide. If you or your counsel's interpretations are contrary to ours, you should, of course, follow your own interpretations in using and completing the form. Comments. We encourage you to comment on and criticize this guide, the form to which it pertains, and all of our other forms. We make every effort to keep up with statutes, case law and financial institution practices, but the industry is constantly evolving and our effort is often assisted by our customers. We especially appreciate copies of any statutes or cases which you might feel are pertinent. Please submit your comments in writing either to your Sales Representative or to: Compliance Services Wolters Kluwer Financial Services 6815 Saukview Drive P.O. Box 1457 St. Cloud, MN Form PM-LOCKBOX 7/2009 1

4 Warranties and Limitations Warranties and Limitations for this Guide WARRANTY DISCLAIMER. THIS GUIDE (INCLUDING ANY UPDATES TO IT), IS PROVIDED TO YOU AS IS AND WITH ALL FAULTS. WOLTERS KLUWER FINANCIAL SERVICES (WKFS) DOES NOT EXPRESSLY OR IMPLIEDLY WARRANT THE UTILITY OF THIS GUIDE OR THE INFORMATION THAT IT CONTAINS. THE USER OF THIS GUIDE MUST MAKE HIS/HER OWN INDEPENDENT JUDGMENT ON THESE ITEMS. WKFS MAKES NO WARRANTY, EXPRESS, IMPLIED, BY DESCRIPTION, BY SAMPLE OR OTHERWISE, AND IN PARTICULAR WITHOUT LIMITATION, MAKES NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS OF PURPOSE REGARDING THIS GUIDE. WKFS employees, sales representatives, and other WKFS agents and representatives do not have authority to create any warranty obligations regarding this guide or to modify the above Warranty Disclaimer. Any such created warranty obligations or modifications will not be effective unless they are in writing and signed by the President or the Chief Financial Officer of WKFS. LIMITATION OF LIABILITY AND REMEDIES. WKFS's liability, whether in contract, warranty, in tort, or otherwise arising in any way in connection with the sale or licensing of this guide (including any updates to it) SHALL NOT INCLUDE LIABILITY FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOST PROFITS, LOSS OR EXPENSE. WKFS's liability for any damages based on the providing, selling, licensing or using of this guide (including any updates to it), regardless of the form of action, shall not be more than the amount you paid for it or ten dollars, whichever is less. TIME LIMIT. No action, regardless of form, arising out of the providing, selling, licensing or using of this guide, may be brought by either party more than one (1) year after the cause of action has occurred, except that this limitation will not apply to an action for non-payment brought by WKFS. NO SUBSTITUTE FOR LEGAL COUNSEL. Before using this guide, you are advised to have your attorney review it to determine its legal sufficiency for your purposes. You acknowledge that WKFS is not authorized to practice law, nor may any of WKFS's officers, employees or agents provide legal counsel or accounting advice to you or your institution. Thus, any questions requiring legal or accounting advice must be directed to your institution's attorney or accounting professional for whom WKFS has no obligation or liability. The following notice is required by law: WOLTERS KLUWER FINANCIAL SERVICES PRODUCTS AND SERVICES ARE NOT A SUBSTITUTE FOR THE ADVICE OF AN ATTORNEY Form PM-LOCKBOX 7/2009 2

5 Warranties and Limitations for the Form(s) That Are the Subject of this Guide The form(s) that are the subject of this guide are covered by an express warranty as follows: Preprinted Form(s). If you received the form(s) in preprinted format, they are covered by the Compliance Warranty for Lending, Deposit, and Retirement Plan Documents, as it may be updated or amended from time to time. The current Compliance Warranty is located on WKFS's internet website: Refer to the website for terms of the warranty. WKFS Software. If you produce the form(s) using WKFS document generating software, they are covered by the express warranty contained in your WKFS software license agreement. Refer to your license agreement for terms of the warranty. Electronic Format. If you received the form(s) in an electronic format ("EForms" or other electronic images) through a license with WKFS or with a third party provider, they are covered by the express warranty contained in your license agreement with WKFS or the third party provider. Refer to your license agreement for terms of the warranty. Other Important Terms for the Use of this Guide APPLICABLE LAW. The terms under which this guide is provided, sold, licensed or used will be governed by the laws of the State of Minnesota without regard to its conflict of laws provisions or those of any other state. Any action relating in any way to this guide will be exclusively venued in a court of competent jurisdiction in the State of Minnesota. COPYRIGHT. No part of this guide or any of WKFS's copyrighted forms may be reproduced by any person, by any means, or for any reason, without WKFS's express written permission. WKFS vigorously enforces its copyright interests and you should be aware that there are criminal penalties as well as civil penalties for violation of copyright law. For additional information about reproducing, licensing, or purchasing this guide, please contact us at: Wolters Kluwer Financial Services North American Law Department 6815 Saukview Drive P.O. Box 1457 St. Cloud, Minnesota Telephone: Form PM-LOCKBOX 7/2009 3

6 This guide is to assist you in using our Lockbox Agreement (Lockbox-Agre). The back page of this guide is a copy of Form Lockbox-Agre with numbers or letters (e.g.1, A) used to designate paragraphs or blank lines. The numbers or letters heading the following paragraphs correspond to the section of the form on the back page to which the paragraph refers. 1 Type in the effective date of the Lockbox Agreement. 2 Type in your customer s (owner of the Lockbox Account and for whom you will be performing services relative to the Lockbox Agreement) name and address. Your customer will be referred to as Account Owner in this guide. 3 Type in your name and address here. (We can imprint this for you.) 4 Type in the account number that you designate for the Account Owner s lockbox account. 5 Type in the address(es) of the post office box(es) that the Account Owner will have the Account Owner s clientele mail payments to. Make sure to include the post office box number(s). Designate which mailings or types of payments will be sent to the post office box(es) and which post office box(es) should receive that mailing or type of payment. 6 Type in the schedule you will use to pick up the contents of the post office box(es) designated above. 7 Type in reasonable variations of the Account Owner s payee designation. This is the name that you would expect to find on the checks sent to the post office box(es) for the Account Owner. Get a list of possible variations of the Account Owner s payee designation from the Account Owner. Note that you can stamp in Account Owner s payee designation if that area of the check is left blank and you can determine from the accompanying papers that the Account Owner is the correct payee. Complies with U.C.C , Determine how often you will send Account Owner a lockbox report and check the corresponding box. 9 Determine what the lockbox report will include and check the appropriate box(es) and/or write in what the report will include. 10 Determine what fees you will charge the Account Owner. If you are using a fee schedule check the box next to see attached fee schedule and attach that schedule (e.g., see attached fee schedule). If you are charging per item processed check the box in front of per item processed and fill in how much per item you will charge in the blank provided. If you are charging a monthly fee then check the box in front of minimum monthly fee and fill in the amount of that fee in the space provided. 11 Determine any additional or miscellaneous fees or expenses that you will charge the Account Owner and type them into the space provided or type them on a separate schedule, attach that schedule and type see attached schedule in the space provided. 12 With this paragraph you may inspect the records held by the Account Owner relating to the Account Owner s debtors who are to make payments to the Lockbox. Form PM-LOCKBOX 7/2009 4

7 13 Determine if you want to be notified of any disputed amount owed the Account Owner from a debtor who was to make payments to the Lockbox and the threshold amount at which you want to be notified and type that amount into the blank provided. 14 Make and retain records of the lockbox contents that are collected by you. Provide the Account Owner with access to records made of the lockbox contents that you collect. 15 Type in the name of the Account Owner. 16 Have the Account Owner date and sign on the line. If there are additional Account Owners use the additional lines. 17 Type the name of your institution. (We can imprint this for you.) 18 You will need to date and sign on the line provided. A B This paragraph establishes the basic Lockbox Agreement and some of the rights and requirements of that Agreement. This paragraph outlines how lockbox deposits will be handled. Make sure to remind the Account Owner to have its clientele include their invoice with their payment. 1 Complies with U.C.C Complies with U.C.C Complies with U.C.C Complies with U.C.C and Complies with U.C.C , 3-204, 3-205, 3-401, 3-402, 3-403, The U.C.C. will allow you to deposit the check if you can determine from the check the amount it was written for, if you can t make that determination the check cannot be deposited. Note U.C.C states: If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers. 7 The revised U.C.C allows for deposit of a check despite accord and satisfaction if the Account Owner has made it clear to its clientele that any disputes regarding payment in full be addressed to an address other than the post office box that is part of the Lockbox Agreement. Otherwise, the check with accord and satisfaction language on it should not be deposited. U.C.C was revised to facilitate the use of lockboxes and to protect from inadvertent accord and satisfaction. 8 Limits your liability for discrepancies that will result from cash payments. 9 Gives you the option to redeposit or return checks that have been returned unpaid. Form PM-LOCKBOX 7/2009 5

8 C D E F G H I J K L M Miscellaneous and rejected items will be returned to the Account Owner by the Financial Institution. If monies are received outside of the post office box that are subject to the Lockbox Agreement then they are to be forwarded to you no later than the first business day following receipt. This paragraph points out that the Lockbox Agreement will not make the deposit agreement between you and the Account Owner void. This paragraph limits your liability and obligates the Account Owner to obtain replacement payments if payments are lost, damaged or stolen. This paragraph warns the Account Owner to pay attention to any tax liability that could be incurred and to take responsibility for any tax obligations. This paragraph identifies law applicable to this Agreement to include the U.C.C. and the law of your State. Complies with U.C.C This paragraph acknowledges standard conventions. This paragraph allows you to object to any transfer of the Lockbox Agreement. This paragraph limits the effect of the Lockbox Agreement on any prior security agreement and provides standard language from the U.C.C. regarding contracts. In addition, the paragraph only allows amendments to the Agreement if made in writing. You must give the Account Owner at least 30 days notice before changing the terms of the Lockbox Agreement. The Account Owner can t change terms of the Lockbox Agreement without your consent. This paragraph outlines the procedures to be taken if the Lockbox Agreement is terminated. Form PM-LOCKBOX 7/2009 6

9 Lockbox Agreement (Lockbox-Agre) Form PM-LOCKBOX 7/2009 7

10 Form PM-LOCKBOX 7/2009 8

11 Form PM-LOCKBOX 7/ Wolters Kluwer Financial Services Form PM-LOCKBOX 7/2009