Custody Agreement
(Secondary Offering of Registered Securities)

Summary

This custody agreement template may be used in a registered secondary offering of securities to coordinate delivery of and payment for selling shareholders' shares. Shareholders deposit shares with a custodian, who delivers them to the underwriters and distributes the underwriters' payment to each selling shareholder. This template includes practical guidance and drafting notes. This template custody agreement is governed by California law and may contain provisions not applicable in other jurisdictions. Under this custody agreement, each selling shareholder agrees to have the custodian serve as a depositary and coordinator of the delivery of their shares pursuant to the underwriting agreement. Each selling shareholder will be party to a separate custody agreement with the custodian, each of which will be substantively identical in form and substance. Counsel must ensure that the mechanics of the underwriting agreement work appropriately with this template and make specific adjustments as needed to account for any discrepancies. For a discussion of underwriting registered offerings, see Underwriting Registered Securities Offerings. For a discussion of documents typically prepared in secondary offerings, see Secondary Offerings and Top 10 Practice Tips: Secondary Offerings. For additional documents used in secondary offerings, see Underwriting Agreement (Combined Primary and Secondary Offering), Selling Stockholders Questionnaire (Public Offering), Selling Stockholder Legal Opinion (Secondary Offering), and Power of Attorney (Secondary Offering).