LOCKBOX AGREEMENT

This Lockbox Agreement is dated this ______ day of _______________, by and between
____________________, a ________ corporation (hereafter referred to as Borrower) and
(hereafter referred to as Lender).
RECITALS:
Lender has required the execution of this Agreement in connection with the financial
accommodations evidenced by that
of even date herewith
executed by Borrower and Lender and all other documents described therein or executed in
connection therewith (the Loan Documents). Now, therefore, in consideration of the foregoing
by the promises herein, Borrower has agreed to the following terms and conditions:
1.
Lockbox. Borrower is currently receiving monies from the sale of inventory and
collection of accounts receivable, in which Lender has security interests. Upon execution of this
Agreement, Lender shall establish one or more post office boxes for the receipt of payments on
accounts receivable of Borrower. Initially, the following post office boxes will be implemented
immediately or within 10 days of execution of this Agreement:
A.

(Borrowers Name)
Post Office Box _______
Salt Lake City, UT 84

The foregoing post office boxes, and all additional or substitute post office boxes
established pursuant to this Agreement are hereafter referred to collectively as the Lockbox.
Borrower shall notify Borrowers account debtors that payments to Borrower
shall hereafter be sent to the Lockbox, by sending each account debtor a notice, in form attached
hereto as Exhibit A. Borrower shall provide Lender, within ten (10) days after the date of this
Agreement, copies of the notices as mailed to account debtors. Borrower agrees, during the term
of this Agreement, to give similar notice and instructions in relation to all accounts receivables
generated in the future. Borrower shall make no effort to redirect payments on accounts from
deposit into the Lockbox or otherwise to collect any payment outside the Lockbox, except with
the prior written consent of Lender. All proceeds and payments on accounts receivable received
directly by Borrower at anytime after the Lockbox is established are held in trust to be verified at
Lender and must be remitted immediately to Lender for deposit into the Collateral Account (as
defined below), and a weekly reconciliation of all deposits shall be given by Borrower to Lender
identifying the invoice to which each such payment relates. Notwithstanding the foregoing,
Lender consents to the following exceptions to the requirement that Borrower direct all proceeds
and payments on accounts receivable to the Lockbox: (a) in connection with an account for
which Borrower requires, for credit reasons, that the account debtor provide to Borrower a postdated check in advance of the due date of the invoice, Borrower may receive such post-dated
check outside of the Lockbox, provided that Borrower delivers to Lender a report of such
payments and receipts on a monthly basis, or more frequently as requested by Lender, and
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further provided that Borrower deliver the post-dated check to the Lockbox when the account is
due; and (b) in connection with accounts assigned for collection to a collection agency or to an
outside attorney, Borrower may allow such collection agency or attorney to collect payments
from account debtors provided that Borrower immediately remit to the Lockbox any proceeds
received by Borrower from the collection agency or attorney, and further provided that Borrower
delivers to Lender a report of such payments and receipts on a monthly basis, or more frequently
as requested by Lender.
2.
Processing Contents of Lockbox. Each business day, Lender or its authorized
designees shall remove the contents of the Lockbox and process items in the Lockbox as follows:
(a) Lender may process items payable to Borrower or a reasonable variation
thereof, and reserves the right, in its sole discretion, to determine what is a reasonable
variation. Lender will make all reasonable efforts to decipher the payee line on all
items. However, if the payee line is not legible, as determined by Lender in its sole
discretion, Lender may return the item to Borrower.
(b) Borrower authorizes Lender, in relation to each check received in the
Lockbox, as follows:
(i)
In relation to any check that is undated, Lender may date stamp the
check and process as if correctly dated.
(ii)
Lender may, in its discretion, process postdated checks or return
them to Borrower.
(iii)
In relation to any check whose written and numerical amounts
disagree, Lender may compare the check to the invoice or other materials
received with the check. Lender, in its discretion, may process the check for the
numeric amount or the written amount, or may choose to return the check
Borrower.
(iv)
Checks which do not have the drawers signature may be stamped
with a request for the drawee bank to contact the Drawer for authority to pay and
process.
(v)
If a check contains the legend paid in full or any other language
that is intended to modify Borrowers contractual rights, or is payable to a payee
other than Borrower, Lender may, in its discretion, deliver the check to Borrower.
Notwithstanding the foregoing, Lender shall have no liability for processing a
check that contains the legend paid in full or any other language that is intended
to modify Borrowers contractual rights.
(vi)
Borrower.

Mail that does not contain any checks will be delivered to

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(vii) If a check is received without an accompanying invoice, any

related correspondence and other material received with such check will be
stapled to the envelope in which it is received.
(viii) Each business day, copies of all deposit tickets, all tape listings, all
rejected checks, and all other instruments and papers referred to in this paragraph
will be made available for Borrower to obtain from Lender by 1:30 p.m. of each
business day.
3.
Depositing Checks to the Collateral Account. For all processed checks, other than
those with respect to which Paragraph 2 provides a different procedure, Borrower authorizes
Lender to endorse the checks and to deposit them to Account Number _____________
maintained by and under the exclusive control of Lender (the Collateral Account) on the
business day of receipt; provided, however, that for this purpose checks received by Lender at its
Operations Center after 9:00 a.m. on a business day will be deemed to have been received on the
following business day.
4.
Limitation of Liability. Lenders liability in connection with the performance of
the transactions covered by this Agreement shall be strictly limited as follows:
(a) In performing its duties hereunder, Lender will exercise due care and will act
in good faith. Lender will not be accountable for its failure to perform any of its
obligations hereunder, except for its gross negligence or willful misconduct, or that of its
employees, officers, or agents. If, as a result of such gross negligence or willful
misconduct, Lender is liable for mishandling any item, such liability shall be limited to
the lesser of the face amount of any check involved or the amount of Borrowers direct
loss as a result of such mishandling. IN NO EVENT SHALL LENDER BE LIABLE
FOR ANY INDIRECT OR CONSEQUENTIAL DAMAGES OR LOSS OF PROFIT,
NOTWITHSTANDING NOTICE TO LENDER OF THE POSSIBILITY OF SUCH
DAMAGES OR LOSSES.
5.
Security Interest. The Lockbox shall be under the exclusive ownership and
control of Lender, and Borrowers rights in the Lockbox are limited to a license, revocable at will
by Lender, for the receipt of payments on accounts receivable of Borrower. Borrower hereby
grants to Lender a security interest in and to all funds, instruments and other items received in
the Lockbox or in the Collateral Account.
6.
Default. If Borrower is in default under the Loan Documents, or in default under
this Agreement, Lender shall have the right, without further notice to or demand upon Borrower,
to apply the proceeds of any items received in the Lockbox and/or Collateral Account against the
obligations owed to Lender under the Loan Documents.
7.
Power of Attorney. Borrower irrevocably appoints Lender (or any person
designed by Lender), until such time as all obligations made by Borrower to Lender are paid in
full, as Borrowers true and lawful attorney-in-fact for all purposes necessary to implement the
foregoing Lockbox procedures, with full authority to receive, open and deliver mail addressed to
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Borrower at the Lockbox, to endorse and negotiate checks and other instruments, receipts and
invoices in the name of Borrower (or any reasonably equivalent), and in addition, upon default
under the Loan Documents, to make collections, give notices and otherwise to act to implement
collection of payments made by account debtors.
8.
Current A/R List. Upon execution of this Agreement, and thereafter on a weekly
basis, Borrower will provide Lender with a current updated list of its accounts receivable,
identifying account debtors, their mailing addresses and amounts owed.
9.
Costs. The cost of $.25 per item deposited into the Collateral Account will be
charged by Lender and will include: pickup, opening, deposit, and a local notification. Borrower
understands that postal charges incurred from the mailing of its correspondence will be assessed
to its account unless Borrower elects, in writing, to pick up the correspondence from a local
Lender office. Borrower will be responsible for a photo copy charge of $.05 per check, and other
charges as described on Exhibit B hereto.
10.
Effect of Agreement. Notwithstanding any other provision of this Agreement to
the contrary, this Agreement is subject to the terms and conditions of the Loan Documents
governing certain loans from Lender to Borrower. This Agreement and the Loan Documents
constitute the entire agreement between Borrower and Lender concerning the Lockbox, and may
not be modified except by a writing signed by Borrower and Lender.
(Borrowers Name)

By:
Title:

Lender

By:
Title:

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