INTRODUCING BROKER-DEALER AGREEMENT
AGREEMENT (“Agreement”), dated as of [______], 20__, by and between _______________________________
(“you”) and Pershing LLC (“Pershing”), a [Delaware] limited liability company.
WHEREAS, Pershing has entered into (i) a Participating Institution Agreement (“Participating Institution
Agreement”) with Promontory Interfinancial Network, LLC (“Promontory”), a Delaware limited liability
company that maintains the Certificate of Deposit Account Registry Service®, or CDARS®, to facilitate the
placement with Insured Institutions (as defined below) of funds of customers of financial institutions (each, a
“Participating Institution”) that have each entered into a Participating Institution Agreement with Promontory
and (ii) an Issuing, Custody, Settlement and Recordkeeping Agreement with The Bank of New York (the “Issuing,
Custody, Settlement and Recordkeeping Agreement”).
WHEREAS, Pershing is willing to act as agent for Depositors, as defined below, that are also customers of brokerdealers registered with the United States Securities and Exchange Commission (“SEC”) under the Securities
Exchange Act of 1934, as amended (“Exchange Act”) for which it acts as clearing broker (“Introducing
Brokers”) in placing the Introducing Broker’s Depositors’ funds at Insured Institutions through CDARS;
WHEREAS, Promontory, using its proprietary order allocation process, will review orders for the placement of
funds of a Participating Institution’s customer ,which may include an Introducing Broker, (“Depositor”) submitted
by Pershing on scheduled dates (each, an “Order Date”) in time deposits (“CDs” and each time deposit, a “CD”)
with depository institutions chartered under the laws of a state or of the United States whose accounts are insured by
the Federal Deposit Insurance Corporation (“FDIC”) (each an “Insured Institution”) and will allocate the orders
among Insured Institutions subject to the Depositor’s approval;
WHEREAS, each CD will (i) be in a principal amount that, when aggregated with interest to accrue over the term
of the CD, will not exceed the Standard Maximum Deposit Insurance Amount (“SMDIA”), currently $100,000, as
adjusted from time to time by the FDIC, (“FDIC Limit”) and (ii) have such terms as may be made available by
Promontory; and
WHEREAS, you are an Introducing Broker that is willing to forward instructions to Pershing for the placement
of your Depositors’ funds at Insured Institutions through CDARS;
NOW, THEREFORE, you and Pershing agree as follows:
Section 1. Conditions for Participation In CDARS as Introducing Broker
Section 1.01 Agreements and Relationship with Depositor
You may request Pershing to submit an Order for your Depositor only if (i) as clearing broker for you, Pershing is
carrying the Depositor’s securities account and (ii) the Depositor and you have entered into a then-current version
of the CDARS Correspondent Broker Deposit Placement Agreement, including any supplements (“Correspondent
Broker Deposit Placement Agreement”) for each separate legal capacity in which the Depositor is acting,
applicable to you and applicable to the type of CDARS transaction requested in the Order or a version of the
Correspondent Broker Deposit Placement Agreement, including any supplements, that has been amended by
you to conform to the then-current version applicable to the type of CDARS transaction requested in the Order.
When Pershing submits an Order for a Depositor, Pershing will be acting as an agent and a deposit broker for
the Depositor.
Section 1.02 Order Submission; Effect of Order Submissions
You may request Pershing to submit an Order for your Depositor only if (i) the Depositor has agreed to have its
funds placed through CDARS in the amounts and on the terms and conditions set forth in the Order; and (ii) you
have made reasonable inquiries and have a reasonable basis for believing that the Depositor will have Immediately
Available Funds available at Pershing in the amount specified in the Order at the time on the Settlement Date
specified by Promontory. A “Settlement Date” is a date on which funds are placed with Participating Institutions.
Immediately Available Funds are funds that under Applicable Law are irreversible, transferable and not subject to
any lien, claim or encumbrance. “Immediately Available Funds” are funds that under Applicable Law are
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irreversible, transferable and not subject to any lien, claim or encumbrance. “Applicable Law” means, as to any
Person, any U.S. or foreign law, rule or regulation or any judgment, decree, order, permit, license, certificate of
authority or approval of any government authority or self-regulatory organization that is applicable to it or its
respective businesses. Applicable Law also includes “know-your-customer” requirements, Office of Foreign Assets
Control regulations, privacy laws and regulations, truth-in-savings laws and regulations, and anti-money laundering
laws and regulations. “Person” means any individual, corporation, partnership, limited liability company, joint
venture, trust, unincorporated organization, joint-stock company, governmental entity or other entity.
Promontory will deem each Order that you request Pershing to submit to Promontory for a Depositor to be your
Depositor’s authorization of any proposed transaction arising out of the Order. You agree that Promontory may rely
on (i) that authorization if, within the time limits set forth by Promontory and notwithstanding the occurrence of any
of the events specified in Section 17 of this Agreement, Promontory does not receive a response from you with
respect to the proposed transaction or (ii) that authorization, as modified, if Promontory receives a response from
you that modifies the proposed transaction in a manner permitted by this Agreement. These authorizations obligate
you to settle the transactions for the purchase of CDs based on your request to Pershing to submit an Order
regardless of whether or not you have received funds from your Depositor by the Settlement Date. In the event you
do not receive funds from your Depositor promptly following the Settlement Date, you agree to notify Pershing that
the CD(s) covered by the Order submitted by Pershing on your behalf should be treated as issued for you and,
accordingly, recorded in your name on Pershing’s books and records.
Section 1.03 Fees
You will be entitled to receive such fees from Pershing in connection with its placement of funds for your
Depositors as you and Pershing agree on from time to time.
Section 1.04 AML, KYC and OFAC Compliance
At all times during the term of this Agreement, (i) you will be in compliance with all anti-money laundering and
know-your-customer laws, including but not limited to, the Bank Secrecy Act, as amended (“BSA”) (codified, as
amended, in sections of 12, 15 and 31 U.S.C.), and the USA PATRIOT Act, and all regulations promulgated
thereunder and (ii) U.S. economic sanctions implemented by regulations of the Office of Foreign Assets Control,
U.S. Department of the Treasury (“OFAC”) (collectively, “AML, KYC and OFAC Laws”), as such laws are
applicable to you or the transactions described in this Agreement. In addition, you will not become a “foreign
financial institution” as defined in 31 U.S.C. §5312(a) and (b).
Section 1.05 Promontory Not Adviser
You agree that Promontory is not acting as an adviser to you or your Depositors and that Promontory will have
no obligation to advise with respect to, comment on or examine the terms of any CD, any payment or any
transaction or any other Participating Institution, any Depositor or any other Person that is a party to any transaction
through CDARS.
Section 2. Placement Procedures
Section 2.01 Order Dates and Terms of CDs
When a Depositor notifies you that the Depositor wishes to place funds through CDARS, you will request from
Pershing, Pershing will provide to you and you will inform the Depositor of (i) the available Order Dates, (ii)
interest rates, maturities and payment terms available on each Order Date, (iii) whether early withdrawal of the CDs
is available and whether any penalties (and processing fees, if applicable) will be imposed on the Depositor for early
withdrawal, and (iv) any limits with respect to placing funds.
Section 2.02 List of Insured Institutions
When a Depositor notifies you that the Depositor desires to place funds through CDARS, you will request from
Pershing, Pershing will provide to you and you will offer the Depositor a list of Insured Institutions at which the
Depositor’s funds may be placed. The Depositor will review the list provided and inform you of the name(s) of any
Insured Institution(s) at which the Depositor does not wish to make a deposit. The Depositor may also provide you
with the names of Insured Institutions not then on the list at which the Depositor does not want to make a deposit.
Once the Depositor has informed you of the name of an Insured Institution at which the Depositor does not want to
make a deposit, you will provide that information to Pershing, which will not place the Depositor’s funds at that
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Insured Institution unless the Depositor notifies you in writing and you notify Pershing that funds may be placed in
the Insured Institution, regardless of whether the funds were submitted for placement through CDARS at the time
the Depositor signs the Correspondent Broker Deposit Placement Agreement or at a later time. When the Depositor
signs the Correspondent Broker Deposit Placement Agreement, the Depositor may indicate to you on Schedule 1,
and you will inform Pershing of, the names of Insured Institutions at which the Depositor does not want to make a
deposit. Upon the Depositor’s request, you will obtain from Pershing the list Promontory maintains of Insured
Institutions at which the Depositor does not wish to make a deposit.
Section 2.03 Request for Placement of Funds
When a Depositor requests you to place the Depositor’s funds through CDARS, you will forward the request to
Pershing, which will submit to Promontory a request for placement of the Depositor’s funds (“Order”), including
the Order Date, the amount of funds to be placed and the terms (including interest rate and APY) of the CDs the
Depositor is seeking. The Order will be in a form established by Promontory and provided to you by Pershing.
For you to forward to Pershing the Depositor’s request to submit an Order, the Depositor must provide you with
all information required by Promontory no later than the time specified in paragraph 1 of Annex A.
Section 2.04 Approval of Proposed Placements
On each Order Allocation Date for which you forward the Depositor’s request to Pershing to submit an Order for
your funds, you will receive from Pershing and make available to the Depositor a list of the names of the Insured
Institutions at which the Depositor’s funds are proposed to be placed, the proposed deposit amount at each Insured
Institution and the names of proposed alternate Insured Institutions at which the Depositor’s funds may be placed.
You will make that list available to the Depositor on the Order Allocation Date at or after the time specified in
paragraph 2 of Annex A, and, at any time prior to the time specified in paragraph 3 of Annex A, the Depositor may
notify you of the name or names of any of the proposed or proposed alternate Insured Institutions at which the
Depositor does not want Pershing to make a deposit for the Depositor. The Depositor may request that you direct
Pershing not to place funds at a proposed or alternate proposed Insured Institution, but the Depositor may not
request you to direct Pershing to place funds at a specific Insured Institution or specify the amount to be placed at
any Insured Institution.
If a sufficient number of proposed and proposed alternate Insured Institutions are eliminated or become unavailable
so that not all of the Depositor’s funds can be placed, only as much of the Depositor’s funds will be placed as can be
accommodated at the remaining Insured Institutions in CDs with principal amounts that, when aggregated with
interest to accrue during the term of the CD, will not exceed the basic FDIC insurance limit. The Depositor’s
remaining funds will not be placed. In such event, Pershing will inform you and you will inform the Depositor of the
amount of the Depositor’s funds that will not be allocated on the Order Allocation Date, and the Depositor may
request you to resubmit to Pershing a request for it to resubmit to Promontory an Order for the Depositor’s unplaced
funds on another Order Date by repeating the procedure outlined above.
If in connection with any placement of the Depositor’s funds through CDARS, the Depositor eliminates a proposed
or proposed alternate Insured Institution in accordance with the above procedures, funds that the Depositor
subsequently requests you to have Pershing submit for placement through CDARS may not be placed in those
Insured Institutions until the Depositor notifies you and you notify Pershing otherwise in writing.
Section 2.05 Depositor’s Consent to Placement
You may not permit Pershing to place a Depositor’s funds unless the Depositor has consented to their placement.
The Depositor will be deemed to have consented to the placement of the Depositor’s funds at the proposed or
proposed alternate Insured Institutions as of the time specified in paragraph 4 of Annex A if by that time the
Depositor (i) communicates approval to you, (ii) does not request the list of proposed and proposed alternate
Insured Institutions from you, (iii) requests the list of proposed and proposed alternate Insured Institutions from
you, but does not respond to the proposed list or (iv) responds to the list of proposed and proposed alternate Insured
Institutions by eliminating one or more of the Insured Institutions, in which case the Depositor will be deemed
to have consented to the placement of the Depositor’s funds at those Insured Institutions that the Depositor has
not eliminated.
Section 2.06 Time by Which Pershing Must Have the Depositor’s Funds; Settlement of Transactions
Unless you have made other arrangements for a Depositor with Pershing, when a Depositor agrees to a placement
of funds under the Correspondent Broker Deposit Placement Agreement, the Depositor also agrees that, by the time
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specified in paragraph 5 of Annex A, the Depositor will have in an account with Pershing Immediately Available
Funds, which under applicable law are irreversible and are not subject to any lien, claim or encumbrance, equal to
the amount of funds the Depositor has informed you that the Depositor is seeking to place. On the Settlement Date,
the Depositor’s funds will be deposited at Insured Institutions, payments to be made in connection with the
placement of CDs will be made, and the CDs will be issued.
Section 2.07 Additions and Early Withdrawal
A Depositor may request early withdrawal by contacting you, at which time you will request Pershing to make
the early withdrawal and Pershing will advise you of any documentation that is required in connection with the
Depositor’s request. You will obtain from your Depositor and provide to Pershing any documentation Pershing has
requested in connection with the withdrawal. If the Depositor specifies which CDs the Depositor would like to have
withdrawn, Pershing will withdraw the specified CDs. If the Depositor does not specify which of the Depositor’s
CDs to withdraw, early withdrawals will be made in accordance with Promontory procedures. You will make
early withdrawal proceeds available to the Depositor two Business Days after you receive the Depositor’s early
withdrawal request. A “Business Day” is any day other than a Saturday, a Sunday or a day on which banks in
New York, New York are authorized or required by law or regulation to close.
Neither Pershing nor Promontory will advance funds in connection with early withdrawals, and early withdrawal
proceeds will not be available to the Depositor until they are paid to Pershing by the Insured Institution that issued
the CD being withdrawn. In connection with the early withdrawal, you will pay to Pershing such portion of the fee
received by you for placement of the CD being withdrawn as you and Pershing agree on from time to time.
Section 2.08 No Automatic Renewal or Rollover
If upon maturity the Depositor wishes to re-deposit the Depositor’s funds in CDs through CDARS, the Depositor
must request you to instruct Pershing to re-submit the funds as a new placement, or the Depositor must take
advantage of your preauthorized re-submission process.
Section 2.09 Preauthorized Re-submission
When the Depositor submits funds to you for placement through CDARS, the Depositor may request that you
instruct Pershing to re-submit those funds for placement through CDARS upon the maturity of the Depositor’s CDs.
Unless you have entered into a written arrangement with the Depositor, the Depositor must contact you before you
instruct Pershing to re-submit the Depositor’s funds through CDARS to establish the new terms (including interest
rate and APY) and the other specifics of the Depositor’s Order for the Depositor’s re-submitted funds.
Section 3. Direct Deposit Relationship With Depositor
If any Depositor terminates the Depositor’s custodial relationship with Pershing, the Insured Institution issuing the
CD, subject to compliance with Applicable Law, has agreed to enter into a direct deposit relationship with the
Depositor upon receipt from the Sub-Custodian through CDARS of the information necessary to establish the direct
deposit relationship and to evidence the deposit relationship in the same manner as the Insured Institution evidences
direct deposit relationships with purchasers of comparable CDs. The Bank of New York may act as your settlement
agent (in that capacity, “Settlement Agent”), sub-custodian (in that capacity, “Sub-Custodian”)
Section 4. Promontory Profits or Losses in Connection With Participating Institutions Requesting Funds Through
CDARS and Liquidity Providers
When funds are placed at a Participating Institution requesting funds through CDARS or supplied by a Liquidity
Provider, Promontory may charge different fees to different Participating Institutions, and in addition to fees payable
to it, may realize profits or incur losses in connection with the placement of those funds. A “Liquidity Provider” is
an institution that has entered into an agreement with Promontory to make deposits at Participating Institutions on a
particular Settlement Date. You hereby agree that in no event will you participate in those profits or be responsible
for those losses.
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Section 5. Service of Process by Third Parties
In the event a subpoena or other legal process, including any notice, order or inquiry, from any judicial, federal or
state regulatory or other governmental authority, concerning this Agreement or the transactions contemplated
hereunder involving you, Pershing, or Promontory is served upon you, Pershing, or Promontory, the served party
agrees that it will notify the other parties immediately upon receipt of such legal process. In addition, you will notify
Pershing and Promontory immediately upon your receipt of any and all requests for information or documents in
connection with this Agreement by or on behalf of any governmental authority, except to the extent such notification
is prohibited by law.
Section 6. Your Representations and Warranties
As of the date hereof and as of the date of each transaction through CDARS in connection with funds you request
Pershing to submit for placement, you represent and warrant to Pershing and Promontory as follows:
Section 6.01 Authorizations, Waivers and Filings
You have obtained any license, consent, approval, waiver or other authorization of or by, and made any filing or
registration with, any court, administrative or regulatory agency or other governmental authority that you are
required to obtain or make in connection with your execution, delivery or performance of, or your consummation of
the transactions contemplated by, this Agreement, including the placement of funds of Depositors through CDARS,
and your acting as referring agent for Depositors.
Section 6.02 Legal, Valid and Binding Obligations
You have full legal power and authority to execute, deliver and perform your obligations under this Agreement. This
Agreement constitutes your legal, valid and binding obligation, enforceable against you in accordance with its terms,
except as may be limited by bankruptcy, receivership, insolvency, liquidation or other similar laws affecting
generally the enforcement of creditors’ rights or by general equitable principles.
Section 6.03 No Conflicts with Applicable Authorities
The execution and delivery of this Agreement, the consummation of the transactions contemplated herein, the
fulfillment of, or compliance with, the terms and provisions hereof, will not conflict with, or result in a breach of
any of the terms, conditions or provisions of, Applicable Law or of your charter or bylaws or of any agreement to
which you are a party or by which you may be bound.
Section 6.04 No Litigation
There is no action, suit, proceeding, inquiry or investigation by or before any court, administrative or regulatory
agency or other governmental authority pending or, to your knowledge, threatened, which would prevent or enjoin
the referral by you of Depositor funds for placement through CDARS, as provided in this Agreement and each
Correspondent Broker Deposit Placement Agreement.
Section 6.05 Truth in Savings Act Compliance
In connection with each transaction through CDARS, you will be in compliance with the requirements of the “Truth
in Savings Act,” 12 USC §§4301 et seq., and the regulations promulgated thereunder as such requirements apply to
deposit brokers.
Section 6.06 Registration as a Broker-Dealer
You are a registered broker-dealer under the Exchange Act and are licensed as a broker-dealer in each jurisdiction in
which you will solicit customers for purchase of the CDs. In addition, you satisfy applicable capital requirements
imposed by the SEC under the Exchange Act and are in good standing with each “Self-Regulatory Organization”, as
defined in the Exchange Act, that has jurisdiction over you, and you will satisfy any additional requirements that
may be established by Promontory.
Section 6.07 Reserved
Section 6.08 Reliance
In making its representations and warranties and performing its obligations under this Agreement, Pershing may rely
on the accuracy of the representations and warranties made, and the information provided, by you hereunder, and in
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performing Pershing’s covenants and agreements under this Agreement, Pershing may assume the performance by
you of your respective covenants and agreements hereunder.
Section 7. Representations and Warranties of Pershing
As of the date hereof and as of the date of each transaction through CDARS in connection with funds you request
Pershing to submit for placement, Pershing represents and warrants as follows:
Section 7.01 Authorizations, Waivers and Filings
Pershing has obtained any license, consent, approval, waiver or other authorization of or by, and made any filing or
registration with, any court, administrative or regulatory agency or other governmental authority that Pershing is
required to obtain or make in connection with its execution, delivery or performance of, or its consummation of the
transactions contemplated by, this Agreement, including the placement of funds of Depositors through CDARS, and
its acting as custodian for Depositors.
Section 7.02 Legal, Valid and Binding Obligations
Pershing has full legal power and authority to execute, deliver and perform its obligations under this Agreement.
This Agreement constitutes Pershing’s legal, valid and binding obligation, enforceable against Pershing in
accordance with its terms, except as may be limited by bankruptcy, receivership, insolvency, liquidation or other
similar laws affecting generally the enforcement of creditors’ rights or by general equitable principles.
Section 7.03 No Conflicts with Applicable Authorities
The execution and delivery of this Agreement, the consummation of the transactions contemplated herein, the
fulfillment of, or compliance with, the terms and provisions hereof, will not conflict with, or result in a breach of
any of the terms, conditions or provisions of, Applicable Law or of Pershing’s charter or bylaws or of any agreement
to which Pershing is a party or by which it may be bound.
Section 7.04 No Litigation
There is no action, suit, proceeding, inquiry or investigation by or before any court, administrative or regulatory
agency or other governmental authority pending or, to Pershing’s knowledge, threatened, which seeks to prevent or
enjoin the submission of Depositor funds by Pershing for placement through CDARS, as provided in this
Agreement, each Correspondent Broker Deposit Placement Agreement, each Participating Institution Agreement,
and the Issuing, Custody, Settlement and Recordkeeping Agreement.
Section 7.05 Truth in Savings Act Compliance
In connection with each transaction through CDARS, Pershing will be in compliance with the requirements of the
“Truth in Savings Act,” 12 USC §§4301 et seq., and the regulations promulgated thereunder as such requirements
apply to deposit brokers.
Section 7.06 Reserved
Section 7.07 Reliance
In making your representations and warranties and performing your obligations under this Agreement, you may rely
on the accuracy of the representations and warranties made, and the information provided, by Pershing hereunder,
and in performing your covenants and agreements under this Agreement, you may assume the performance by
Pershing of its respective covenants and agreements hereunder.
Section 8. Failure to Pay
You agree that if your Depositor fails to make any payment when due under the Depositor’s Correspondent Broker
Deposit Placement Agreement for settlement of an Order submitted for the Depositor and under arrangements you
may make for a Depositor with Pershing you fail to make payment when due for settlement of the Order submitted
for your Depositor (a “Failure to Pay”), you will be liable to Pershing and to Promontory for any Damages,
including those associated with failing to establish or unwinding deposits, incurred by any Participating Institution,
Pershing, Promontory, the Issuing Agent, the Sub-Custodian or the Settlement Agent as a direct or indirect
consequence of the Failure to Pay, including the penalties, if any, imposed by Promontory unless the penalties are
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waived by Promontory. Pursuant to the Issuing, Custody, Settlement and Recordkeeping Agreement, The Bank of
New York may act as your settlement agent (in that capacity, “Settlement Agent”), sub-custodian (in that capacity,
“Sub-Custodian”), and recordkeeper (in that capacity, “Recordkeeper”). “Damages” include claims, losses,
liabilities and other damages and related costs and expenses, including reasonable legal fees and expenses. You
agree that promptly upon demand by Pershing or Promontory you will pay to Pershing or Promontory, as the case
may be, the amount you owe, together with interest thereon computed in accordance with the Issuing, Custody,
Settlement and Recordkeeping Agreement or, in lieu thereof, at the “Federal Funds (Effective)” rate of interest as
published by the Board of Governors of the Federal Reserve System in the H.15 (519) publication under the heading
“Selected Interest Rates” plus 2% per annum for each day such amount is owed, and a $100 processing fee.
Section 9. Notice of Enforcement Actions
To the extent permitted by law, you will promptly notify Pershing of any pending or final formal enforcement action
issued against you by the SEC or any “self-regulatory organization”, as defined in the Exchange Act, that has
jurisdiction over you.
Section 10. Confidentiality
“Confidential Information” means (a) all Promontory IP (as defined below) and (b) other than Promontory IP, all
non-public information that is received by one party to this Agreement (“Receiving Party”) from the other party
(“Disclosing Party”). With respect to Promontory IP, you are the Receiving Party and each of Pershing and
Promontory is the Disclosing Party. Each party to this Agreement and Promontory under the Participating Institution
Agreement will safeguard and hold confidential from disclosure to unauthorized parties all Confidential Information
of which it is the Receiving Party unless it obtains the prior written consent of the Disclosing Party; provided that
the obligations of the Receiving Party to keep information confidential will not apply to any Confidential
Information (i) known to the Receiving Party prior to receipt of the Confidential Information from the Disclosing
Party or (ii) developed or acquired by the Receiving Party by lawful means independently of any Confidential
Information it receives from the Disclosing Party. Notwithstanding the foregoing, disclosure may be made by any of
the aforementioned Persons to state or federal agencies in a manner and to the extent required by the legal and
regulatory requirements applicable to any of such Persons in their respective capacities in connection with this
Agreement or pursuant to a court order; provided that, unless prohibited by Applicable Law or unless the request for
disclosure is made as part of an audit or other examination by a governmental or regulatory authority, prior written
notice of such proposed disclosure shall be furnished to the Disclosing Party as soon as practicable in order to afford
the Disclosing Party a reasonably sufficient time to seek, at its expense, a protective order.
“Promontory IP” means (i) Promontory’s order allocation process, (ii) the CDARS Website and all information
accessible thereon, (iii) all algorithms, computer programs, concepts, ideas, inventions, machines, mask works,
procedures, processes, rates, security codes, and works of authorship, in all cases whether or not patentable or
copyrightable, that are owned or in-licensed by Promontory or that otherwise are or have been created, developed or
generated, in whole or in part, by or on behalf of Promontory in connection with the services to be provided
pursuant to this Agreement, (iv) all data and other information that are or can be collected, compiled or derived by
or on behalf of Promontory from any usage by you or any other person of any work, invention or other subject
matter referred to in items (i) through (iii) of this sentence, and (v) any work, invention or other subject matter that
constitutes an enhancement, modification, improvement, upgrade or update of, or that is otherwise based on or
derived from, any work, invention or other subject matter referred to in any of items (i) through (iv) of this sentence,
whether provided by you, Promontory or any other person.
Section 11. Audit
From time to time during the longer of the term of this Agreement, you and Promontory will permit the other or its
designees at the other’s expense, during regular business hours and upon 10 days’ prior written notice, when and as
requested, to perform an audit of the other’s relevant business records solely to ensure that adequate security
precautions have been made and are implemented in order to prevent unauthorized disclosure of any information
obtained by the other or its agents in connection with this Agreement. To the extent permitted by law, you and
Promontory will also each provide access to records concerning the transactions and services contemplated herein
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and service locations at which such records are maintained to any state or federal agency with jurisdiction over
the other Person in a manner and to the extent required by the legal and regulatory requirements applicable to the
other Person.
Section 12. Indemnification; Limitation of Liability
Section 12.01 Indemnification by You
You agree to defend, indemnify and hold harmless Pershing, Promontory and any Participating Institution and each
of their officers, directors, employees and agents (each, an “Indemnitee”) from and against any and all losses,
liabilities, claims, costs or expenses (including court costs and reasonable attorney’s fees), including any claim
against any one of them by any other of them whether maintained by right of subrogation or otherwise, incurred by
any of them attributable to: (i) your negligence, fraud or misconduct or the negligence, fraud or misconduct of any
of your officers, directors, employees or agents in connection with this Agreement; (ii) a breach of any
representation or warranty by you or any of your officers, directors, employees or agents pursuant to this
Agreement; (iii) any default by you or any of your officers, directors, employees or agents in any of your agreements
or covenants under this Agreement; (iv) any claims resulting from, or arising out of claims by a third party in
connection with, errors or omissions in the Depositor Information or other information provided by you or any of
your officers, directors, employees or agents; and (v) any assertion or claim that you or any of your officers,
directors, employees or agents have committed a violation of, or failed to comply with, Applicable Law in your
performance of this Agreement or your Correspondent Broker Deposit Placement Agreements. “Depositor
Information” means any and all customer data relating and identified to a Depositor, including the Depositor’s
name, address, telephone number, account number, taxpayer identification number and financial information.
Section 12.02 Indemnification by Promontory
You shall be a third party beneficiary of a provision in the Participating Institution Agreement whereby Promontory
agrees to defend, indemnify and hold harmless Pershing and its officers, directors, employees and agents from and
against any and all losses, liabilities, claims, costs or expenses (including court costs and reasonable attorney’s fees)
incurred by Pershing or any of its officers, directors, employees and agents attributable to any infringement of the
intellectual property rights of any third party by Promontory IP or any resource, information or item provided to
Pershing by Promontory.
Section 12.03 Notice of Claim and Participation
Any person seeking indemnification under this Agreement (the “Indemnified Party”) from or against the assertion
of any claim by a third party will give prompt written notice to the party from whom such indemnification is sought
(the “Indemnifying Party”); provided, however, that failure to give prompt written notice will not relieve the
Indemnifying Party of any liability hereunder (except to the extent the Indemnifying Party suffers actual material
prejudice in the defense of the claim or increased liability for any loss, claim, cost or expense (including court costs
and reasonable attorney’s fees) by reason of such failure). The Indemnifying Party and the Indemnified Party will
cooperate in the defense or prosecution of any third party claims. The Indemnifying Party shall assume and will
have control over the defense and/or settlement of the claim; provided that (i) defense counsel retained by the
Indemnifying Party shall be reasonably satisfactory to the Indemnified Party, and (ii) subject to such control, the
Indemnified Party may participate in such defense with counsel of its choosing at its own expense. Neither the
Indemnifying Party nor the Indemnified Party will enter into any settlement of any such claim or legal proceeding
relating thereto without the prior written consent of the other party, such consent not to be unreasonably withheld
or delayed.
Section 13. Term and Termination; Survival
Section 13.01 Term; Termination
This Agreement will continue in full force and effect until terminated (i) by you immediately upon providing written
notice to Pershing or at such later time as stated in such notice or (ii) by Pershing (A) upon delivery of 60 days’ prior
written notice to you or (B) for Cause immediately upon providing written notice to you or at such later time as
stated in such notice. “Cause” will mean (a) any breach by you of any agreement, representation, warranty or
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FRM-CDARS-IBA-2-09
covenant pursuant to or under this Agreement and (b) in the case of a Failure to Pay, your failure to remit the
required amount to Pershing within 24 hours of its request for payment.
Section 13.02 Survival
All disclaimers and indemnities contained in this Agreement will survive the termination of this Agreement, as will
all other terms and conditions that must survive in order to give them effect. Upon termination of this Agreement,
you will remain obligated for payment of any outstanding past due fees owed by you to Pershing pursuant to Section
8 of this Agreement. With respect to each CD for which Pershing acts as custodian, the rights and obligations of the
parties under this Agreement with respect to the CD will survive termination of this Agreement until the maturity of
the CD, including Sections 1.03, 8, and 17 of this Agreement, unless otherwise agreed in writing. In addition, and
without limiting any of the foregoing, Sections 10, [11], 13, 14, 15, 18 and 19 of this Agreement will survive
termination of this Agreement.
Section 13.03 Services Continued upon Termination
Following termination of this Agreement, Pershing will continue to provide the services contemplated hereunder,
including access to the CDARS Website, with respect to outstanding CDs that Pershing maintains as custodian until
their maturity or payment.
Section 13.04 Return of Materials
You must return to Pershing all materials relating to CDARS received by you from Pershing or any of its agents, and
all copies of any such materials, upon (i) Pershing’s request or (ii) termination of this Agreement.
Section 14. Third Party Beneficiaries
To the extent this Agreement gives rights to Promontory or any of its Affiliates as a third party beneficiary of a
provision of this Agreement (each, a “Third Party Beneficiary”), the Third Party Beneficiary may benefit from
and rely on such provision. “Affiliate” means, as to any entity, any other entity that directly or indirectly, controls,
is controlled by or is under common control with Promontory. As to Promontory and its Affiliates, the Third Party
Beneficiary provisions of this Agreement include Sections 5, 6, 7, 10, the indemnification provisions of Section 12,
Sections 15.01, 15.02, 15.03, 16.01, and 16.02 hereof, and may be enforced by Promontory and its Affiliates for
their benefit, subject to the conditions and limitations of Sections 12.04, 15.01, 15.02 and 16.02. There are no Third
Party Beneficiaries to this Agreement other than those listed in the previous sentence.
Section 15. Intellectual Property
Section 15.01 Ownership of Intellectual Property
You agree that, as between you and Promontory, Promontory solely owns, and will continue solely to own, all right,
title and interest, including all Intellectual Property Rights (as defined below), in and to all Promontory IP. If and to
the extent any such right, title or interest vests in you for any reason, by operation of law or otherwise, you hereby
irrevocably transfer and assign to Promontory all right, title and interest, including all Intellectual Property Rights, in
and to all Promontory IP. You agree that you will execute all writings and perform all other acts reasonably
requested by Promontory to perfect or protect any right, title or interest of Promontory or its designee in or to any
Promontory IP.
“Intellectual Property Rights” means (i) all patents, copyrights, trademarks, service marks, rights in trade names
or trade dress, trade secrets, rights in mask works, and applications or registrations for any of the foregoing,
anywhere in the world, with respect to any subject matter or media now known or later devised and (ii) any other
intellectual property or proprietary rights, anywhere in the world, with respect to any subject matter or media now
known or later devised.
Section 15.02 No Dissemination or Reverse Engineering of Intellectual Property
You agree that you will not copy, disseminate, display, distribute, publish, sell or otherwise use or disclose any
Promontory IP in any manner or for any purpose, or create any works or other materials based on or derived from
any Promontory IP, except if and solely to the extent expressly authorized in this Agreement or by an authorized
Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation.
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FRM-CDARS-IBA-2-09
officer of Promontory in writing. You agree that in no event will you decompile, disassemble or otherwise reverse
engineer any Promontory IP.
You agree that you will not permit any of your officers, directors or employees or any agent, sub-contractor, service
provider or other person gaining access to Promontory IP directly or indirectly through you, to copy, disseminate,
display, distribute, publish, sell or otherwise use or disclose any Promontory IP in any manner or for any purpose, or
create any works or other materials based on or derived from any Promontory IP, except if and solely to the extent
expressly authorized in this Agreement or by an authorized officer of Promontory in writing. You will not permit
any person gaining access to any Promontory IP directly or indirectly through you to decompile, disassemble or
reverse engineer any Promontory IP.
Section 15.03 No Grant to Third Parties
You will not purport to grant any person a license to, or any other right, title or interest in or to, any Promontory IP,
and any such purported grant shall be null and void.
Section 16. Advertising and License to Use Marks
Section 16.01 Advertising
Neither you nor Pershing will use the other party’s name or refer to or describe the other party. You will not refer to
Pershing, Promontory or CDARS or any CDARS transaction (with or without referring to CDARS by name),
directly or indirectly in any promotional materials, including written or broadcast advertisements, news releases,
releases to any professional or trade publication, or application forms, without (i) providing the promotional
materials or application forms to Pershing for prior review and (ii) obtaining prior written approval by Pershing.
Notwithstanding the foregoing, unless you inform Pershing otherwise in writing, you authorize Pershing or
Promontory to list your name on any list of Participating Institutions that Pershing or Promontory compiles for
promotional purposes.
Section 16.02 License
Under the Participating Institution Agreement, Promontory has granted you a royalty-free, nonexclusive,
nontransferable license, without the right to grant sublicenses, to use the service marks relating to CDARS (each
a “Mark” and cumulatively the “Marks”) solely (a) while this Agreement remains in effect, (b) to market the
CDARS service and its availability to support the placement of depositor funds by you in promotional and other
materials identified in Section 23.01, (c) within the United States and its territories and possessions, (d) in
accordance with and subject to the terms and conditions of this Agreement. [Promontory is deemed to approved
the use of Marks as part of promotional materials that are acquired from Promontory’s fulfillment site, and used
unmodified (other than for provided-for customization), in accordance with the procedures specified by Promontory
on the fulfillment site.]
You acknowledge the validity of, and agree not to challenge, the Marks and Promontory’s ownership of all right,
title, and interest therein. You agree (a) that any and all rights that may be acquired by any use of any one or more
Marks by you shall inure to the sole benefit of Promontory, (b) that you will execute all papers reasonably requested
by Promontory to effect further registration of, maintenance, and renewal of the Marks and, where applicable, to
record Promontory as registered user of the Marks, (c) that you will not use the Marks or any part thereof as part of
your corporate name or make any use of any name or mark confusingly similar to the Marks, (d) that you will not
register (or apply to register or maintain the registration of) in any country any name or mark that is confusingly
similar to any of the Marks, and (e) that you will not use any Mark in connection with any activity that is deceptive,
misleading, or otherwise contrary to Applicable law.
Section 17. Impossibility of Performance
The performance of this Agreement by either party shall be excused during any delay or failure of performance, and
such party shall not be liable for any non-performance of this Agreement during any delay or failure of performance
caused by any event beyond the reasonable control of such party and not due to the gross negligence or willful
misconduct of such party, including, but not limited to, change of Applicable Law, failure of systems hardware or
software, acts of civil or military authorities, acts of God, war, Internet, electrical power or other utilities
malfunction or interruption, terrorism, civil disorder or disturbance, riot, labor dispute, acts or omissions of another
Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation.
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FRM-CDARS-IBA-2-09
party, or acts or omissions of any third party (including a Depositor or another Participating Institution). Such party
will resume its performance as promptly as practicable under the circumstances.
Section 18. Notices
Section 18.01 Addresses
All notices not otherwise provided for in this Agreement (each, a “Notice”) will be in writing and will be sent by
facsimile, electronic mail, or overnight courier, unless otherwise agreed in writing by the parties to this Agreement,
as follows.
If to Pershing, to:
Address
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Phone:
_______________________________________________________________
Facsimile:
_______________________________________________________________
Email:
_______________________________________________________________
If to you, to:
Address
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Phone:
_______________________________________________________________
Facsimile:
_______________________________________________________________
Email:
_______________________________________________________________
Section 18.02 When Notice Deemed Given
Each Notice sent or delivered hereunder will be deemed to have been given or to have become effective for all
purposes of this Agreement as follows: (i) if sent by overnight courier, on the earlier of the date when received or
when delivery was refused; and (ii) if sent by facsimile or electronic mail, when receipt of the transmission is
acknowledged by the receiving party.
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PAGE 11 OF 16
FRM-CDARS-IBA-2-09
Section 19. Miscellaneous
Section 19.01 Miscellaneous References to Statutes, Rules or Regulations
Any reference to a statute, rule or regulation in this Agreement will be deemed also to refer to any amendment or
successor provision to that statute, rule or regulation.
Section 19.02 Relationship of Parties
Nothing contained in this Agreement will be deemed or construed by the parties, or any third party, to create the
relationship of partnership or joint venture between the parties hereto. You and Pershing are contractual parties only
for the performance of services.
Section 19.03 Invalidity
If any provision or condition of this Agreement is held invalid or unenforceable by any court, federal or state
regulatory authority or self-regulatory organization, such invalidity or unenforceability shall attach only to such
provision or condition, and the validity of the remaining provisions and conditions hereof shall remain unaffected.
Section 19.04 Exclusivity
This Agreement constitutes the entire and exclusive statement of the Agreement between the parties with respect
to CDARS and supersedes all prior agreements, understandings, negotiations, representations and proposals, written
or oral.
Section 19.05 Modification
The terms of this Agreement may be modified prospectively (i) by written agreement of both parties or (ii) by
Pershing, upon delivery of written notice to you, provided that the modification may not become effective until 30
days after delivery of the written notice.
Section 19.06 Successors
Neither this Agreement nor any of the rights, interests or obligations under it may be assigned by either party
without the prior written consent of the other party; provided, however, no prior consent of the other party shall be
required in connection with an assignment to another Person that is (i) effected by merger, consolidation or
otherwise by operation of law; or (ii) part of a sale or transfer of all or substantially all of such party’s business or
assets. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective successors and permitted assigns. Any purported assignment in
violation of this Section 19.06 will be void.
Section 19.07 Choice of Law and Venue
This Agreement will be deemed to have been executed and delivered in the State of New York and will be governed
by and construed in accordance with the internal law of the State of New York, excluding any conflicts or choice of
law, rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive
law of another jurisdiction. The parties hereby consent to (i) the exclusive jurisdiction and venue of the courts of the
State of New York or the United States District Court for the Southern District of New York located in the Borough
of Manhattan, The City of New York for the purpose of any action or proceeding brought by any of them on or in
connection with this Agreement or any alleged breach hereof and (ii) waive the right to object to the venue of such
court or to claim that such court is an inconvenient forum. THE PARTIES HEREBY WAIVE TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT OR THE SERVICES OR TRANSACTIONS HEREBY CONTEMPLATED.
Section 19.08 Waiver
The failure of either party to require the performance by the other party of any provision of this Agreement will not
affect in any way the full right to require the performance at any other time. The waiver by either party of a breach
of any provision of this Agreement will not be taken or held to be a waiver of the provision itself. Any course of
performance will not be deemed to amend or limit any provision of this Agreement.
Section 19.09 Counterparts
This Agreement may be executed in any number of counterparts, each of which will be deemed an original.
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FRM-CDARS-IBA-2-09
Section 20. Definitions and Interpretation
Section 20.01 Definitions
In this Agreement, the following terms have the meanings indicated below:
“Affiliate” has the meaning provided in Section 14.
“Agreement” has the meaning provided in the introductory paragraph.
“AML, KYC and OFAC Laws” has the meaning provided in Section 1.04.
“Applicable Law” has the meaning provided in Section 1.02.
“Business Day” has the meaning provided in Section 2.07.
“CD” and “CDs” have the meaning provided in the third “Whereas” clause.
“CDARS” has the meaning provided in the first “Whereas” clause.
“Cause” has the meaning provided in Section 13.01.
“Confidential Information” has the meaning provided in Section 10.
“Correspondent Broker Deposit Placement Agreement” has the meaning provided in Section 1.01.
“Damages” has the meaning provided in Section 8.
“Depositor” has the meaning provided in the third “Whereas” clause.
“Depositor Information” has the meaning provided in Section 12.01.
“Disclosing Party” has the meaning provided in Section 10.
“Exchange Act” has the meaning provided in the second “Whereas” clause.
“Failure to Pay” has the meaning provided in Section 8.
“FDIC” has the meaning provided in the third “Whereas” clause.
“FDIC Limit” has the meaning provided in the fourth “Whereas” clause.
“Immediately Available Funds” has the meaning provided in Section 1.02.
“Indemnified Party” has the meaning provided in Section 12.03.
“Indemnifying Party” has the meaning provided in Section 12.03.
“Indemnitee” has the meaning provided in Section 19.01.
“Insured Institution” has the meaning provided in the third “Whereas” clause.
“Intellectual Property Rights” has the meaning provided in Section 15.01.
“Introducing Brokers” has the meaning provided in the fifth “Whereas” clause.
“Issuing, Custody, Settlement and Recordkeeping Agreement” has the meaning provided in the first
“Whereas” clause.
“Liquidity Provider” has the meaning provided in Section 4.
“Mark” and “Marks” have the meaning provided in Section 16.02.
“Notice” has the meaning provided in Section 18.01.
“Order Date” has the meaning provided in the second “Whereas” clause.
“Participating Institution” has the meaning provided in the first “Whereas” clause.
“Participating Institution Agreement” means a Participating Institution Agreement (DI) or a Participating
Institution Agreement (BD).
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FRM-CDARS-IBA-2-09
“Participating Institution Agreement - BD” means the agreement between Promontory and a broker-dealer
registered under the Exchange Act and licensed in each jurisdiction in which the broker-dealer offers the CDs
pursuant to which the broker-dealer participates in CDARS.
“Participating Institution Agreement - DI” means an agreement between Promontory and a member of the FDIC
pursuant to which the member of the FDIC participates in CDARS.
“Person” has the meaning provided in Section 1.02.
“Promontory” has the meaning provided in the first “Whereas” clause.
“Promontory IP” has the meaning provided in Section 10.
“Receiving Party” has the meaning provided in Section 10.
“SEC” has the meaning provided in the second “Whereas” clause.
“Self-Regulatory Organization” has the meaning provided in Section 6.06.
“Settlement Agent” has the meaning provided in Section 8.
“Settlement Date” has the meaning provided in Section 1.02.
“SMDIA” has the meaning provided in the fourth “Whereas” clause.
“Sub-Custodian” has the meaning provided in Section 3.
“Third Party Beneficiary” has the meaning provided in Section 14.
“you” has the meaning provided in the introductory paragraph.
Section 20.02 Interpretation
In this Agreement, the words “including” and “includes” mean “including, without limitation” and “includes,
without limitation.”
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PAGE 14 OF 16
FRM-CDARS-IBA-2-09
ANNEX A
Important Times and Deadlines in Connection
With the Placement of Your Depositor’s Funds
This schedule contains important times and deadlines with respect to the placement of your Depositor’s funds. These
times may change from time to time or on any particular Order Date or Order Allocation Date (which are currently
the same Business Day), and you shall inform the Depositor of any change in times, as applicable, before the
Depositor submits its funds for placement.
1. Time and day by which you must receive your Depositor’s request to have its funds placed: _________________
on ______________________________________.
2. Time and day at or after which you must make available the list of names of the Insured Institutions at which your
Depositor’s funds are proposed to be placed: 3:00 p.m. ET on the Order Allocation Date.
3. Time and day by which the Depositor must inform you of the name or names of any proposed Insured Institution
at which the Depositor does not want to make a deposit: 4:00 p.m. ET on the Order Allocation Date.
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FRM-CDARS-IBA-2-09
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the Effective Date.
BY: ________________________________________________________
NAME
________________________________________________________
TITLE
PERSHING LLC
BY: ________________________________________________________
NAME
________________________________________________________
TITLE
Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation.
Member FINRA, NYSE, SIPC. Trademark(s) belong to their respective owners.
PAGE 16 OF 16
FRM-CDARS-IBA-2-09