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DEPOSIT ACCOUNT AUTOMATIC SWEEP INVESTMENT INSERT
(for optional use; to be inserted in Section 10 of Part B of the Deposit Account
Control Agreement)
version 1 dated October 5, 2007
available from the American Bar Association’s Business Law Section at
http://www.abanet.org/dch/committee.cfm?com=CL710060
10[._]
(a)
Periodic Automatic Sweep Investments.
In this subsection, the following terms have the following meanings:
“Sweep Agreement” means a Deposit-related Agreement governing a
Sweep Investment.
“Sweep Investment” means a cash management product offered by the
Bank to certain classes or groups of its customers, including the Debtor, by
which the Bank automatically (i) withdraws all or a portion of the funds
in the Deposit Account on a daily or other periodic basis, (ii) invests the
withdrawn funds for the benefit or account of the Debtor in securities directly
held by the Bank, in instruments directly held by the Bank, in a securities
account for which the Bank is either the entitlement holder or the securities
intermediary, or in a deposit account for which the Bank is either the
depositary bank’s customer or the depositary bank, (iii) at the end of the
investment period, re-deposits to the Deposit Account funds that were
withdrawn by the Bank from the Deposit Account and invested in the Sweep
Investment, less any loss of funds suffered by the investment and the amount
of any Sweep Investment Fees, and (iv) credits to the Deposit Account the
amount of any dividend or other return on the investment or interest, if any,
earned on the funds in the investment during the specific investment period,
all in accordance with the Sweep Agreement governing the Sweep
Investment.
“Sweep Investment Fees” means any fees or other charges assessed in
accordance with the Sweep Agreement against the Debtor’s interest in the
Sweep Investment.
(b)
If the Bank is the:
(i)
registered owner of securities, or the holder of instruments, of
which the Sweep Investment is a component, then the Bank acknowledges
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that it has registered ownership of the Debtor’s interest in the securities, or
holds the Debtor’s interest in the instruments, in each case for the benefit
and on behalf of the Secured Party;
(ii)
entitlement holder of a securities account, or the customer on a
deposit account, of which the Sweep Investment is a component, then the
Bank acknowledges that it has control of the Debtor’s interest in the Bank’s
security entitlements in the securities account, or that the Bank has control
of the Debtor’s interest in the Bank’s rights as customer in the funds in the
deposit account, in each case for the benefit and on behalf of the Secured
Party;
(iii) securities intermediary maintaining a securities account of
which the Sweep Investment is a component, then the Bank will comply,
without further consent of the Debtor, with entitlement orders originated by
the Secured Party as to the Debtor’s interest in the security entitlements in
the securities account; and
(iv) depositary bank maintaining a deposit account of which the
Sweep Investment is a component, then the Bank will comply, without
further consent of the Debtor, with instructions originated by the Secured
Party as to the disposition of the Debtor’s interest in the funds in the deposit
account.
(c)
The Secured Party hereby originates an entitlement order or
instruction directing the Bank to continue, at the end of each investment period of
the Sweep Investment, to re-deposit in the Deposit Account funds that were
withdrawn by the Bank from the Deposit Account and invested in the Sweep
Investment, less any loss of funds suffered by the investment and the amount of any
Sweep Investment Fees, together with the amount of the dividend or other return
on investment or interest, if any, earned thereon during the investment period, all
in accordance with the Sweep Agreement. This entitlement order or instruction
may not be amended without the consent of the Bank.
(d)
The Bank may continue the Debtor’s participation in the Sweep
Investment in accordance with the Sweep Agreement until the Secured Party shall
have instructed the Bank to terminate the Debtor’s use of the Sweep Investment
[following the Bank’s acting or being required by the terms of this Agreement to act
on the Initial Instruction]. However, unless the Bank otherwise shall be instructed
by the Secured Party [following the Bank’s acting or being required by the terms of
this Agreement to act on the Initial Instruction], the Debtor may at any time
terminate the Sweep Agreement and its participation in the Sweep Investment, or
the Debtor may replace the Sweep Investment with a different Sweep Investment in
which the Debtor participates in accordance with the terms of another Sweep
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Agreement. The provisions of this subsection shall apply to any replacement Sweep
Investment and its Sweep Agreement.
(e)
The Secured Party acknowledges that, because of the automated
operations of the Sweep Investment, while funds that were withdrawn from the
Deposit Account by the Bank are invested in the investment component of the
Sweep Investment, the Bank will not be operationally capable of implementing any
Disposition Instruction originated by the Secured Party relating to the invested
funds, or any other entitlement order or instruction not contained in paragraph (c),
until the invested funds, less any loss of funds suffered by the investment and the
amount of any Sweep Investment Fees, shall have been re-deposited to the Deposit
Account in accordance with the Sweep Agreement.
(f)
This subsection does not (i) affect any right of the Bank to terminate
the Sweep Investment in accordance with the Sweep Agreement, (ii) impose any
duty on the Bank that is not expressly provided in this subsection or in the Sweep
Agreement, or (iii) provide to the Secured Party any right not available to the
Debtor under the Sweep Agreement.
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