THE VANGUARD GROUP, INC.
DEFINED CONTRIBUTION CLEARANCE & SETTLEMENT
AGREEMENT
THIS AGREEMENT, made this 8th day of January, 2009 by and between THE VANGUARD
GROUP, INC. ("Vanguard"), a Pennsylvania corporation with its principal place of
business in Pennsylvania, and HARTFORD LIFE INSURANCE COMPANY, INC. (the
"Intermediary"), a stock life insurance company organized under the laws of the
state of Connecticut with its principal place of business in Connecticut.
WITNESSETH
WHEREAS, Vanguard provides services as transfer agent, dividend disbursement
agent, and shareholder servicing agent for the open-end management investment
companies registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), that are included in The Vanguard Group of investment companies, as
well as Vanguard STAR Funds and Vanguard Institutional Index Fund (each, a
"Vanguard Fund" and collectively, the "Vanguard Funds");
WHEREAS, the Intermediary is either (i) a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) an
investment adviser registered under the Investment Advisers Act of 1940, as
amended, (iii) a bank or trust company which is a member of the Federal Reserve
System or is supervised and examined by state or federal authorities having
supervision over banks, (iv) an insurance company which is supervised and
examined by state authorities having supervision over insurance companies, or
(v) a transfer agent or clearing agency registered under the Exchange Act;
WHEREAS, the Intermediary provides participant accounting, record-keeping,
administrative and/or other services to certain plans intended to meet the
qualification requirements of Sections 401, 403(b) of 457 of the Internal
Revenue Code of 1986, as amended (each, a "Plan" and collectively, the "Plans");
WHEREAS, the Intermediary is an insurance company that issues certain group
variable annuity contracts and variable funding agreements (the "Contracts")
funded through an insurance company separate account (the "Separate Account");
WHEREAS, each Separate Account is a duly organized, validly existing segregated
asset account, established by resolution of the Board of Directors of the
Intermediary under the insurance laws of the State of Connecticut to set aside
and invest assets attributable to the Contracts;
WHEREAS, the Intermediary issues Contracts in connection with the Plans;
WHEREAS, each Contract provides for the allocation of purchase payments and
transfers of Contract value between or among the various sub-accounts of a
Separate Account;
WHEREAS, each sub-account invests in shares of an open-end management investment
company which serves as an investment option under the Contract;
WHEREAS, the Intermediary has established or will establish individual accounts
on its defined contribution plan record-keeping system reflecting all
transactions by or on behalf of participants and beneficiaries
under each Plan which result in purchase, redemptions or current-day exchanges
by the Separate Account of shares of the Vanguard Funds;
WHEREAS, Vanguard has established or will establish accounts on its mutual fund
shareholder record-keeping system to reflect the Separate Accounts' ownership of
shares of the Vanguard Funds and all transactions by the Separate Accounts
involving such shares;
WHEREAS, Vanguard and the Intermediary are members of the National Securities
Clearing Corporation ("NSCC") or otherwise have access to the NSCC's Fund/SERV
system ("Fund/SERV");
WHEREAS, Fund/SERV permits the electronic transmission of the Separate Accounts'
account transaction data between Vanguard and the Intermediary;
WHEREAS, Vanguard and the Intermediary desire to participate in Fund/SERV with
respect to transactions by the Separate Accounts involving shares of the
Vanguard Funds, pursuant to the terms and conditions set forth in this Agreement
and the Operating and Contingency Procedures/Defined Contribution Clearance &
Settlement, as they may be modified from time to time in Vanguard's sole
discretion, which are attached hereto and made a part hereof (the "DCC&S
Operating/Contingency Procedures");
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. APPOINTMENT OF THE INTERMEDIARY AS AGENT.
(a) Authorization of Intermediary. Subject to any and all limitations set forth
in this Agreement and in the DCC&S Operating/Contingency Procedures, Vanguard,
as transfer agent for the Vanguard Funds, hereby appoints the Intermediary as
the limited agent of Vanguard, and the Intermediary hereby accepts such
appointment, for the purpose of treating instructions received by the
Intermediary from Plan participants and Contract owners as to the allocation of
Contract purchase payments, Contract transfers and Contract surrenders (to the
extent such instructions would result in the purchase, redemption or exchange of
Vanguard Fund shares by a Separate Account) ("Instructions") as receipt by
Vanguard of purchase, redemption and exchange orders for shares of the Vanguard
Funds. A Vanguard Fund will be deemed to have received a purchase, redemption or
exchange order when the Intermediary accepts the order in accordance with this
Agreement. In most instances, a Plan participant or Contract owner will receive
the share price next computed by the Vanguard Fund after the time at which such
Plan participant or Contract owner provides Instructions to the Intermediary,
provided all of the requirements and obligations of the Intermediary with
respect to acceptance and transmission of orders set forth in this Agreement are
satisfied.
(b) Participant-Level and Contract Owner-Level Transactions. The purchases,
redemptions and exchanges accepted by the Intermediary pursuant to Section 1(a)
above shall be based on: (i) Plan participant-level or Contract owner-level
transactions made by or on behalf of Plan participants and Contract-owners under
the Separate Accounts which are recorded on the Intermediary's record-keeping
system; or (ii) other authorized transaction directions received by the
Intermediary from the Separate Accounts which are recorded on the Intermediary's
record-keeping system. For purposes of this Agreement, "Plan participant-level
transactions" shall relate only to defined contribution funds and shall include
the following and "Contract owner-level transactions" shall also include the
following:
(A) Any authorized Instruction to a Separate Account by or on behalf of
any Plan participant or Contract Owner to invest in a Vanguard Fund
through the Separate Account in accordance with the terms and
conditions of the Plan, Contract and the applicable Vanguard Fund
prospectus;
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(B) Any authorized Instruction to a Separate Account to exchange existing
amounts held on behalf of any Plan participant, or Contract Owner to a
Vanguard Fund through the Separate Account in accordance with the terms
and conditions of the Contract, Plan and the applicable Vanguard Fund
prospectus;
(C) Any authorized Instruction to a Separate Account to exchange existing
amounts invested in a Vanguard Fund through the Separate Account on
behalf of any Plan participant or Contract owner to any other investment
option offered under the Plan or Contract, as the case may be, in
accordance with the terms and conditions of the Plan, Contract and the
applicable Vanguard Fund prospectus; and
(D) Any authorized Instruction to a Separate Account on behalf of any Plan
participant or Contract owner to pay loan, withdrawal or distribution
proceeds to a Plan participant or Contract owner from a Vanguard Fund
held through the Separate Account in accordance with the terms and
conditions of the Plan, Contract and the applicable Vanguard Fund
prospectus.
(c) Separate Account Recordkeeping. (i) The Intermediary shall maintain records
for the Separate Accounts and for the Plan participants and Contract owners
reflecting all shares of the Vanguard Funds purchased, redeemed and exchanged by
the Separate Accounts based on Instructions (including the date and price for
all transactions and share balances) and all re-investments by the Separate
Accounts of dividends and capital gains distributions paid by the Vanguard
Funds. The Intermediary shall reconcile on each day that the New York Stock
Exchange is open for trading (a "Business Day") all transactions by the Separate
Accounts involving shares of the Vanguard Funds (including purchases,
redemptions, exchanges and reinvestments of dividends and capital gains
distributions) with the corresponding Instructions on the Intermediary's
record-keeping system. It is understood than the Intermediary's maintenance of
Plan participant-level account records for a Plan and Contract owner-level
accounts records for a Contact are done as the agent for the Separate Accounts
and not as the agent for Vanguard or any of its affiliates.
(ii) The Intermediary shall promptly notify Vanguard if the Intermediary
experiences difficulty in maintaining Plan participant-level records
and/or Contract-owner level records, all as described above, in an
accurate and complete manner. The Intermediary agrees to furnish
Vanguard with such information as Vanguard may reasonably request
from time to time in order for Vanguard to verify the Intermediary's
compliance with the terms of this Agreement (including, without
limitation, periodic certifications confirming the provision of the
Intermediary's record-keeping services to the Separate Accounts in a
manner consistent with the terms of this Agreement).
(d) No Extension of Agency. Notwithstanding the authorizations granted by
Vanguard under this Section 1, the Intermediary shall not be, nor hold itself
out to the public or engage in any activity as an agent for Vanguard in respect
of or in connection with the distribution or marketing of shares of the Vanguard
Funds.
(e) Availability of Vanguard Fund Shares. The parties acknowledge and agree
that the availability of shares of any Vanguard Fund shall be subject to the
Vanguard Fund's then-current prospectus and statement of additional information,
applicable federal and state laws, and applicable rules and regulations of the
Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory
Authority, Inc. ("FINRA").
2. COMPLIANCE RESPONSIBILITIES.
(a) Vanguard is responsible for (i) the compliance of each prospectus,
registration statement, annual or other periodic report, proxy statement and
item of advertising or marketing material prepared by it relating to each
Vanguard Fund with all applicable laws, rules and regulations (except for
advertising or marketing material prepared by the Intermediary to the extent any
information therein was not published or provided to the Intermediary by or on
behalf of Vanguard or any Vanguard Fund or accurately derived from information
published or provided by or on behalf of Vanguard or any Vanguard Fund), (ii)
the registration or
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qualification of the shares of each Vanguard Fund under all applicable laws,
rules and regulations, and (iii) the compliance by Vanguard and each Vanguard
Fund with all applicable laws, rules and regulations (including the 0000 Xxx)
governing its performance under this Agreement, and the rules and regulations of
each self-regulatory organization with jurisdiction over Vanguard or the
Vanguard Fund, except to the extent that the failure to so comply by Vanguard or
any Vanguard Fund is caused by the Intermediary's breach of this Agreement or
the Intermediary's willful misconduct or negligence in the performance of, or
failure to perform, its obligations under this Agreement.
(b) The Intermediary is responsible for the Intermediary's compliance with all
applicable laws, rules and regulations governing its performance under this
Agreement, and the rules and regulations of each self-regulatory organization
with jurisdiction over the Intermediary, except to the extent that the
Intermediary's failure to comply with any law, rule or regulation is caused by
Vanguard's breach of this Agreement or Vanguard's willful misconduct or
negligence in the performance of, or failure to perform, its obligations under
this Agreement.
3. FEES AND EXPENSES.
(a) Vanguard and the Intermediary agree that no fees will be paid to, or
exchanged or shared between Vanguard and the Intermediary under this Agreement.
(b) Each party will pay all of its out-of-pocket expenses incurred in
connection with the performance of its obligations under this Agreement, except
as may otherwise be specified in this Agreement.
4. REPRESENTATIONS AND WARRANTIES.
(a) Vanguard represents and warrants that:
(i) It has the requisite authority to enter into this Agreement on its
own behalf and on behalf of the Vanguard Funds;
(ii) It has taken all actions legally necessary to authorize the
execution and delivery of this Agreement and the performance of its
obligations hereunder, and this Agreement has been duly executed and
delivered by its authorized representative and constitutes its
legal, valid and binding obligation, enforceable against Vanguard in
accordance with its terms;
(iii) It or an affiliate is in compliance with the applicable Conditions
and qualifications set forth in Rule 2830 of the Conduct Rules of
FINRA, as amended from time to time, which enable a member of FINRA
to offer or sell shares of the Vanguard Funds;
(iv) Each Vanguard Fund is a no load or no sales charge fund;
(v) Either the Vanguard Funds, Vanguard or its agent are Fund Members of
the NSCC and have access to the NSCC's Fund/SERV system; and
(vi) Vanguard currently has and at all times pertinent hereto will have
sufficient financial resources, whether through a fidelity bond or
otherwise, to meet all of its financial obligations arising under
this Agreement, including its obligations under Section 12 of this
Agreement.
(b) The Intermediary represents and warrants that:
(i) It is one or more of the following: (A) a broker-dealer registered
under the Exchange
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Act and a member in good standing of FINRA; (B) an investment adviser
registered under the Investment Advisers Act of 1940, as amended; (C) a
bank or trust company which is a member of the Federal Reserve System
or is supervised and examined by state or federal authorities having
supervision over banks; (D) an insurance company which is supervised
and examined by state authorities having supervision over insurance
companies; or (E) a transfer agent or clearing agency registered under
the Exchange Act;
(ii) It or a relevant designee is an NSCC Member and has access to
Fund/SERV;
(iii) It has taken all actions legally necessary to authorize the execution
and delivery of this Agreement and the performance of its obligations
hereunder, and this Agreement has been duly executed and delivered by
its authorized representative and constitutes its legal, valid and
binding obligation, enforceable against the Intermediary in accordance
with its terms;
(iv) All orders for the purchase, redemption and exchange of shares of the
Vanguard Funds ("Orders") which correspond to Instructions received by
the Intermediary from a Plan participant or Contract owner on a
Business Day, and any corrections to such Orders, will be entered by
the Intermediary onto Fund/SERV by the applicable cutoff time for Order
entries or entry corrections set forth in the DCC&S Operating
Procedures;
(v) It will not transmit any Order to Vanguard through Fund/SERV on a
Business Day pursuant to this Agreement unless (A) the Intermediary has
received Instructions resulting in such Order from the Plan participant
or Contract owner prior to the close of the New York Stock Exchange
(generally, 4:00 p.m. Eastern Time) ("Market Close") on such Business
Day, and (B) such Order is for a tax-qualified defined contribution
plan;
(vi) It will not permit a Plan or participant, Contract owner or Separate
Account to cancel or modify after Market Close on a Business Day any
Order or Instructions received from such Plan participant. Contract
owner or Separate Account prior to Market Close on such Business Day;
(vii) All Orders transmitted to Vanguard through Fund/SERV pursuant to this
Agreement will have been duly authorized by the applicable Separate
Account;
(viii) With respect to all Orders transmitted to Vanguard through Fund/SERV
pursuant to this Agreement, the Intermediary will maintain, or cause
to be maintained, records sufficient to document the truth of the
representations and warranties set forth in this Section 4(b); such
records will be available to Vanguard for inspection promptly upon
request;
(ix) The Intermediary maintains policies and procedures that are designed to
ensure compliance with the requirements of Rule 22c-1 under the 1940
Act, applicable SEC and SEC staff interpretations, and the terms of
this Agreement, and the Intermediary is in compliance with such
policies and procedures;
(x) The Intermediary currently has and at all times pertinent hereto will
have sufficient financial resources, whether through a fidelity bond or
otherwise, to meet all of its financial obligations arising under this
Agreement, including its obligations under Section 12 of this
Agreement;
(xi) The Intermediary (A) has not designated or authorized, and will not
during the term of this Agreement designate or authorize, any
underlying institution to accept on the Vanguard Funds' behalf
Instructions or Orders from or on behalf of customers of such
underlying institution, and (B) does not and will not during the term
of this Agreement hold any Vanguard Fund shares for or on behalf of an
underlying
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institution that (1) holds such Vanguard Fund shares on behalf of
its underlying customers or (2) otherwise constitutes a "financial
intermediary" as such term is defined in SEC Rule 22c-2(c)(1); and
(xii) the Contracts are exempt from or not subject to registration under
the Securities Act of 1933, as amended (the "1933 Act") and the
Contracts will be issued and sold in compliance in all material
respects with all applicable federal and state laws and with state
insurance suitability requirements.
(xiii) it is an insurance company duly organized and in good standing
under applicable law and that it has legally and validly
established each Separate Account prior to any issuance or sale
thereof as a segregated asset account under Section 38a-433 of the
Connecticut Insurance Code and each Separate Account is exempt
from registration under the 1940 Act. The Intermediary will notify
Vanguard if it believes a Separate Account will cease to qualify
for the exception from the definition of investment company
provided under Sections 3(c)(1), 3(c)(7), or 3(c)(11) of the 1940
Act. Notification shall be made prior to the end of the calendar
quarter in which the Intermediary becomes aware that the Separate
Account may cease to qualify.
(xiii) In connection with the authorizations in Section 1 of this
Agreement, the Intermediary represent and warrants to Vanguard
that:
(A) The Intermediary has implemented an internal control structure
and adopted written internal control procedures that are
reasonably designed to prevent and detect on a timely basis
Orders resulting from Instructions received by the
Intermediary after Market Close from being aggregated with
Orders received by the Intermediary before Market Close, and
to minimize errors that could result in late transmission of
Orders to Vanguard ("Internal Control Procedures").
(B) The Intermediary will review, no less than annually, the
adequacy of its Internal Control Procedures and will change
and modify them as necessary to maintain their adequacy.
(C) Upon request by Vanguard, the Intermediary will provide
Vanguard with a description of its Internal Control Procedures
and a certification from the Intermediary that they are
adequate as of the most recent review.
5. OBLIGATIONS OF VANGUARD.
(a) Transactions Subject to Fund/SERV. Vanguard will accept Orders transmitted
by the Intermediary through Fund/SERV on behalf of the Separate Accounts in
accordance with this Agreement and the DCC&S Operating/Contingency Procedures.
Vanguard will be responsible for processing and executing any such Orders from
the Intermediary in a timely manner.
(b) Performance of Duties. Vanguard will perform any and all duties, functions,
procedures and responsibilities assigned to it under this Agreement and as
otherwise established by the NSCC from time to time. Vanguard will maintain
facilities, equipment and skilled personnel sufficient to perform the foregoing
activities and to otherwise comply with the terms of this Agreement. Vanguard
will conduct each of the foregoing activities in a competent manner and in
compliance with (i) all applicable laws, rules and regulations, including NSCC
rules and procedures relating to Fund/SERV, and (ii) the then-current
prospectuses, statements of additional information ("SAIs"), and policies of the
Vanguard Funds; provided, however, that in the event of a conflict between the
provisions of the DCC&S Operating/Contingency Procedures and any applicable
"optional" NSCC rule or procedure, the DCC&S Operating/Contingency Procedures
will control.
(c) Accuracy of Information, Transmissions Through and Access to Fund/SERV. All
information provided by Vanguard to the Intermediary through Fund/SERV and
pursuant to this Agreement will be accurate, complete and in the format
prescribed by the NSCC. Vanguard will adopt, implement and maintain
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procedures reasonably designed to ensure the accuracy of all transmissions
through Fund/SERV and to limit the access to, and the inputting of data into,
Fund/SERV to persons specifically authorized by Vanguard.
(d) Pricing Information. On every Business Day, Vanguard will transmit by 7:00
p.m., Eastern time, each Vanguard Fund's closing net asset value and public
offering price (if applicable) for that day and/or notification of no price for
that day, to the Intermediary via both the NSCC's Mutual Fund Profile Service
and such other transmission method mutually agreed to by the parties. Vanguard
shall provide such information on a best efforts basis taking into consideration
any extraordinary circumstances arising at the Vanguard Funds (e.g., natural
disasters, etc.). The Intermediary shall not be entitled to rely on any source
of net asset value information other than such transmission by Vanguard.
6. OBLIGATIONS OF THE INTERMEDIARY.
(a) Performance of Duties. The Intermediary will perform any and all duties,
functions, procedures and responsibilities assigned to it under this Agreement
and as otherwise established by the NSCC from time to time. The Intermediary
will maintain facilities, equipment and skilled personnel sufficient to perform
the foregoing activities and to otherwise comply with the terms of this
Agreement. The Intermediary will conduct each of the foregoing activities in a
competent manner and in compliance with all applicable laws, rules and
regulations, including NSCC rules and procedures relating to Fund/SERV;
provided, however, that in the event of a conflict between the provisions of the
DCC&S Operating/Contingency Procedures and any applicable "optional" NSCC rule
or procedure, the DCC&S Operating/Contingency Procedures will control.
(b) Accuracy of Information, Transmissions Through and Access to Fund/SERV. All
information provided by the Intermediary to Vanguard through Fund/SERV and
pursuant to this Agreement will be accurate, complete and in the format
prescribed by the NSCC. For each Fund/SERV Order, the Intermediary will provide
Vanguard with all information reasonably required by Vanguard to establish and
maintain such Order (and any subsequent adjustments to such Order). The
Intermediary will adopt, implement and maintain procedures reasonably designed
to ensure the accuracy of all transmissions through Fund/SERV and to limit the
access to, and the inputting of data into, Fund/SERV to persons specifically
authorized by the Intermediary.
(c) Accepting and Transmitting Orders. As provided in Section 1, and in
accordance with the procedures set forth below and in the DCC&S
Operating/Contingency Procedures, the Intermediary will act as the limited agent
of Vanguard to receive Instructions from Plan participants and Contract owners
that result in Orders by the Separate Accounts for purchase, redemption and
exchange by the Separate Accounts of shares of the Vanguard Funds. All such
Orders shall be settled with the NSCC, except as otherwise provided in the DCC&S
Operating/Contingency Procedures.
(i) Receipt by the Intermediary of Participant-Level Transactions. The
parties understand and agree that the Intermediary may receive
participant-level transactions in various formats, including
directions in writing, by computer magnetic tape, diskette or
electronic data transmission, through interactive voice response
system, or by any other accepted method for transmitting defined
contribution plan data that is adopted for the Plans, Contracts and
Separate Accounts. All Instruction shall be received and processed
by the Intermediary in accordance with its standard transaction
processing procedures that apply to all investment options offered
through the Separate Accounts under the Contracts and Plans. The
Intermediary shall maintain records sufficient to identify the date
and time of receipt of all Instructions resulting in Orders for the
Vanguard Funds and shall make such records available upon request
for examination by Vanguard or its designated representative or, at
the request of Vanguard, by appropriate governmental authorities or
self-regulatory organizations. Under no circumstances shall the
Intermediary change, alter or manipulate any Instructions received
by it in good order.
(ii) Transmission by the Intermediary of Orders. Based on the
Instructions and other authorized transactions from the Separate
Accounts received by the Intermediary prior to Market Close on each
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Business Day, the Intermediary shall transmit to Vanguard via
Fund/SERV by the time of receipt of Cycle 7 from the NSCC on the
following Business Day (approximately 7:00 a.m. Eastern time) a file
containing the Order, in dollars or shares, by each Separate Account
(or in the aggregate for all Separate Accounts if the parties have
agreed in advance) for shares of each Vanguard Fund for the preceding
Business Day. Each transmission by the Intermediary of a net purchase
or redemption Order shall constitute a representation by the
Intermediary that such order was based solely on Instructions and
other authorized transactions from the Separate Accounts received by
the Intermediary prior to the Market Close on the previous Business
Day, and that such Order included only and all such transactions so
received by the Intermediary.
(d) Redemption Fees. The parties acknowledge that as of the effective date of
this Agreement, the Intermediary does not offer any Vanguard Funds that charge a
redemption fee. However, in the event the Intermediary does offer Vanguard Funds
that charge a redemption fee, the following provision shall apply. The
Intermediary agrees that it will, where applicable, track, assess and remit to
Vanguard, for the benefit of the relevant Vanguard Funds, redemption fees
incurred by Plan participants as a result of transactions in Vanguard Funds that
charge redemption fees, in accordance with the terms of the Redemption Fee
Procedures set forth in Exhibit A attached to this Agreement, as such Exhibit
may be modified by Vanguard from time to time in its discretion.
(e) Purchase Fees. The parties acknowledge that as of the effective date of
this Agreement, the Intermediary does not offer Vanguard Funds that charge a
purchase fee. However, in the event the Intermediary does offer Vanguard Funds
that charge a purchase fee, the following provision shall apply. The
Intermediary agrees that it will, where applicable, track, assess and remit to
Vanguard, for the benefit of the relevant Vanguard Funds, purchase fees incurred
by Plan participants as a result of transactions in Vanguard Funds that charge
purchase fees, in accordance with the terms of the Vanguard Purchase Fee
Procedures set forth in Exhibit B attached to this Agreement, as such Exhibit
may be modified by Vanguard from time to time in its discretion.
(f) Frequent Trading Policy. The Intermediary agrees that it will apply the
frequent trading policy described in or attached as Exhibit C to this Agreement
to Plan participants and Contract owners investing in the Vanguard Funds through
the Separate Accounts, as such Exhibit may be modified by the Intermediary upon
reasonable advance written notice to Vanguard.
(g) Extraordinary Plan Events. The Intermediary is not authorized to accept as
Vanguard's agent any Order for the purchase or redemption of shares in an amount
which equals or exceeds the "Large Transaction Amount" for a Vanguard Fund, as
specified in Attachment A to the DCC&S Operating/Contingency Procedures
("Attachment A"), where such Order is the result of an "Extraordinary Plan
Event" of which the Intermediary is aware, unless the Intermediary has notified
Vanguard of such Order by telephone as soon as practicable on the trade date and
in no event later than one hour prior to the Market Close on the trade date. For
these purposes, an "Extraordinary Plan Event" shall mean an event outside the
normal operation of a Separate Account such as an entire Separate Account or
Plan moving into or out of a Vanguard Fund or an asset transfer arising from a
merger, acquisition or divestiture. In addition, in accordance with the
prospectus of each Vanguard Fund, Vanguard reserves the right to refuse any
purchase Order, or to delay settlement of any redemption Order, which Vanguard,
in its sole discretion. deems disruptive or detrimental to the applicable
Vanguard Fund. In connection with any redemption Order that equals or exceeds
the applicable Large Transaction Amount, Vanguard reserves the right to delay
delivery of redemption proceeds for up to seven days, to the extent permitted by
applicable law or regulation, or to effect the redemption through an in-kind
distribution of securities. Vanguard reserves the right to revise Attachment A
at any time and will provide 30 days' advance written notice of such revision to
the Intermediary.
(h) Multiple Share Classes. Certain Vanguard Funds dentified on Attachment A
offer one or more special share classes to qualifying investors investing in
such Vanguard Funds, including investors investing through financial
intermediaries. Vanguard agrees to make these share classes, as in effect from
time to time, available to
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those Intermediary accounts with Vanguard that satisfy all then-current
eligibility requirements, as specified in Exhibit D attached to this Agreement
(which Exhibit may be modified by Vanguard from time to time in its discretion),
subject to the Intermediary's compliance with the additional terms and
conditions set forth in Exhibit D Vanguard and the Vanguard Funds reserve the
right to discontinue availability of any one or more share classes at any time
and for any reason without prior notice.
(i) Closed Funds. On occasion, Vanguard may close to new or existing investors
one or more of the Vanguard Funds ("Closed Funds") on terms or subject to
conditions that may vary from Closed Fund to Closed Fund.
(i) If, pursuant to the terms of a Closed Fund's closure, any Closed
Fund remains available to Plans investing in the Closed Fund through
Separate Accounts, then from and after the date on which such Closed
Fund is closed to new investors (as such date is determined by
Vanguard), the Intermediary will not:
(A) Open a new account in such Closed Fund, or
(B) Transmit an Order to purchase shares of such Closed Fund,
unless, in either case, the Plan on behalf of which such account is opened or
Order is transmitted is eligible to invest in such Closed Fund pursuant to the
terms of the closure and, if applicable, the aggregate amount invested in the
Closed Fund by such Plan during the relevant period does not exceed any maximum
investment limitation imposed in connection with the fund closing.
(ii) If a new account is opened in a Closed Fund or a purchase of shares
in a Closed Fund is requested in violation of this Section 6(i),
Vanguard shall be authorized to cancel the Order by means of which
the new account was opened or the purchase was requested at any time
and, in the case of a new account, to terminate the account at any
time. Any such Cancellation and/or termination shall be on a
current-day basis, and Vanguard will return to the Intermediary the
lesser of (A) the amount initially invested in violation of
paragraph (i) above or (B) the then-current value of such
investment.
(j) Advance Information. Vanguard will provide the Intermediary with reasonable
notice of any revisions to the Vanguard Funds' prospectuses and/or SAIs that
Vanguard believes would affect the Intermediary's performance of its duties and
obligations pursuant to this Agreement. In addition, from time to time, the
Vanguard Funds may implement policy changes that affect the Intermediary's
performance of recordkeeping for a Separate Account or Contract. In order to
allow the Intermediary a reasonable amount of time to make any necessary
adjustment to its record-keeping systems. Vanguard, in its sole discretion, may
communicate such policy changes to the Intermediary before transmitting this
information to Vanguard Fund shareholders as a whole ("Advance Information").
The Intermediary shall treat all Advance Information as confidential pursuant to
Section 11 of this Agreement and, prior to its being made public by Vanguard,
shall use such information solely for systems adjustment purposes. The
Intermediary shall communicate Advance Information to its own directors,
officers and employees on a need to know basis, only. Under no circumstances
shall the Intermediary communicate Advance Information to any Plan, its sponsor,
trustee or participants, Contract owner or to anyone else except as expressly
permitted in this Section 6(j) or with Vanguard's prior written consent, until
such information becomes publicly available.
(k) Tax Compliance and Reporting.
(i) Responsibilities of the Intermediary. The Intermediary shall be
responsible for obtaining all information necessary in order to
assure that all accounts in the Vanguard Funds are established and
maintained in compliance with applicable tax laws, rules and
regulations. The Intermediary shall comply in all respects with any
and all applicable obligations relating to tax reporting and
withholding pursuant to the
9
Internal Revenue Code of 1986, as amended (the "Code"), or other
applicable tax laws, rule and regulations, including without
limitation such obligations relating to the Separate Account
purchases and redemptions and any Contract owner-level transactions.
The Intermediary shall promptly advise Vanguard or the Vanguard
Funds of any matter that may affect the responsibilities of the
Vanguard Funds or Vanguard to Plan participants or beneficiaries,
Contract owners or the Separate Accounts pursuant to the Code or
other applicable tax laws, rules and regulations. All information
that is received by the Intermediary from the Vanguard Funds or
Vanguard for inclusion in Plan participant, Contract owner or the
Separate Account tax statements shall be reported to the Plan
participants, Contract owners or the Separate Accounts, as
applicable, accurately, completely and in a timely manner. The
Intermediary also agrees to obtain and maintain, and to the extent
necessary, provide to any Vanguard Fund or Vanguard, for each
account in a Vanguard Fund, all forms or documents required by
applicable laws, rules or regulations with regard to any of the
foregoing.
(ii) Tax Status of the Intermediary. Upon execution of this Agreement,
the Intermediary will provide Vanguard with a duly completed
Internal Revenue Service ("IRS") Form W-9 (Request for Taxpayer
Identification Number and Certification), or any updated or
successor form, signed under penalties of perjury. The Intermediary
agrees to notify Vanguard of any changes in its respective tax
status and, as appropriate, to provide Vanguard with a new IRS Form
W-9, or any updated or successor form.
(iii) Survival of Tax Obligations. As the Intermediary is responsible
hereunder for complying with all applicable laws, rules and
regulations concerning the proper establishment and continued
maintenance of their respective accounts in the Vanguard Funds,
including, without limitation, IRS or Code requirements regarding
certified tax identification numbers and compliance with all
applicable tax laws, rules and regulations relating to tax
reporting and withholding, Vanguard and the Vanguard Funds will not
be responsible for compliance therewith. All obligations of the
Intermediary related to such tax compliance, including without
limitation compliance with all notice obligations under IRS or Code
requirements and payment of any and all related fines, interest,
penalties or tax, shall survive termination of the Intermediary's
accounts and this Agreement.
(iv) Manual Settlement Procedures. If the Intermediary instructs
Vanguard or a Vanguard Fund to remit payments other than to the
Intermediary as provided in Section 5(f) of the DCC&S
Operating/Contingency Procedures and Vanguard or a Vanguard Fund
accepts such instructions, the Intermediary will be responsible
hereunder for complying with all applicable tax laws, rules and
regulations concerning such payment, including without limitation
any tax reporting and withholding requirements under IRS or Code
requirements.
(l) Certain Transactions and Restrictions.
(i) Agreement to Provide Information. The Intermediary agrees to
provide to Vanguard on behalf of a Vanguard Fund, upon written
request, the taxpayer identification number ("TIN"), the
Individual/International Taxpayer Identification Number ("ITIN"), or
other government-issued identifier ("GII"), and the policy number
associated with the Shareholder (as defined below), if known, of any
or all Shareholders, and the amount, date, and transaction type
(purchase, redemption, transfer, or exchange) of every purchase,
redemption, transfer, or exchange of Shares (as defined below) held
through an account maintained by the Intermediary during the period
covered by the request. Unless otherwise specifically requested by
Vanguard, the Intermediary shall only be required to provide
information relating to Shareholder-Initiated Transfer Purchases or
Shareholder-Initiated Transfer Redemptions (each as defined below).
(ii) Period Covered by Request. Requests must set forth a specific
period, not to exceed 90 calendar days from the date of the request,
for which transaction information is sought. Vanguard may request
transaction information older than 90 calendar days from the date of
the request as it deems necessary to
10
investigate compliance with policies established by the Vanguard
Fund for the purpose of eliminating or reducing any dilution of the
value of the outstanding Shares issued by the Vanguard Fund.
(iii) Timing of Requests. Requests by Vanguard on behalf of the Vanguard
Fund for transaction information shall be made no more frequently
than quarterly except as Vanguard deems necessary to investigate
compliance with policies established by the Vanguard Fund for the
purpose of eliminating or reducing any dilution of the value of the
outstanding Shares issued by the Vanguard Fund.
(iv) Form and Timing of Response.
(A) The Intermediary agrees to provide the requested information
specified in paragraph (i) above promptly, but in any event not
later than ten Business Days after receipt of a request by
Vanguard. If the requested information is not on its books and
records, the Intermediary agrees to use best efforts to promptly
either (1) provide (or arrange to have provided) to Vanguard the
information set forth in paragraph (i) above for Shareholders who
hold an account with an indirect intermediary or (2) restrict or
prohibit the indirect intermediary from purchasing, in nominee
name on behalf of other persons, securities issued by the
Vanguard Fund. In such instances, the Intermediary agrees to
inform Vanguard whether it plans to perform (1) or (2). For
purposes of this paragraph, an "indirect intermediary" has the
same meaning as defined in SEC Rule 22c-2(c)(5)(iii) under the
0000 Xxx.
(B) Responses required by this paragraph must be communicated in a
format mutually agreed upon by Vanguard and the Intermediary.
(C) To the extent practicable, the format for any transaction
information provided to Vanguard should be consistent with the
NSCC Standardized Data Reporting Format.
(v) Limitations on Use of Information. The Intermediary agrees that the
information provided pursuant to paragraph (i) above will not be
used for marketing or any other purpose not related to (A) limiting
or reducing abusive trading in Shares issued by the Vanguard Fund,
(B) collecting purchase or redemption fees (if any), or (C)
fulfilling other regulatory or legal requirements, subject to the
privacy provisions of Title V of the Xxxxx-Xxxxx-Xxxxxx Act (Public
Law 106-102) and comparable state laws.
(vi) Agreement to Restrict Trading. The Intermediary agrees to execute
written instructions from Vanguard on behalf of a Vanguard Fund to
restrict or prohibit further purchases or exchanges of Vanguard Fund
Shares by any Shareholder that has been identified by the Vanguard
Fund as having engaged in transactions of the Vanguard Fund's Shares
that violate policies established by the Vanguard Fund for the
purpose of eliminating or reducing any dilution of the value of the
outstanding Shares issued by the Vanguard Fund. Unless otherwise
directed by Vanguard, any such restrictions or prohibitions shall
apply to Shareholder-Initiated Transfer Purchases or
Shareholder-Initiated Transfer Redemptions that are effected
directly or indirectly through the Intermediary. Instructions must
be received by the Intermediary at the following address, or such
other address that the Intermediary may communicate to Vanguard in
writing from time to time, including, if applicable, a facsimile
telephone number:
The Hartford 22c-2 Operations Team, B3W
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000.000.0000
(vii) Form of Instructions. Instructions must include the TIN, ITIN, or
GII, and the specific individual Shareholder policy or account number,
if known, and the specific restriction(s) to be executed, including
how long the restriction(s) is(are) to remain in place. If the TIN,
ITIN, GII or the specific individual
11
Shareholder policy or account number is not known, the instructions
must include an equivalent identifying number of the Shareholder or
other agreed upon information to which the instruction relates. Upon
request of the Intermediary, Vanguard agrees that it will provide
the Intermediary reasonable assistance in providing the affected
Shareholders' information reasonably requested regarding the
restriction or prohibition.
(viii) Timing of Response. The Intermediary agrees to execute instructions
from Vanguard to restrict or prohibit trading as soon as reasonably
practicable, but not later than ten Business Days after receipt of
the instructions by the Intermediary.
(ix) Confirmation by the Intermediary. The Intermediary must provide
written confirmation to Vanguard that instructions from Vanguard to
restrict or prohibit trading have been executed. The Intermediary
agrees to provide confirmation as soon as reasonably practicable,
but not later than ten Business Days after the instructions have
been executed.
(x) Definitions. For purposes of this Section 6(1), the following terms
shall have the following meanings:
(A) The term "Shareholder-Initiated Transfer Purchase" means a transaction
that is initiated or directed by the Shareholder that results in a
transfer of assets to a Vanguard Fund, but does not include
transactions that are executed: (A) automatically pursuant to a
contractual or systematic program or enrollment such as transfer of
assets within a Plan, Separate Account or Contract to a Vanguard Fund
as a result of "dollar cost averaging" programs, Intermediary-approved
asset allocation programs, or automatic rebalancing programs; (B)
pursuant to an account death benefit; (C) one-time step-up in account
value pursuant to an account death benefit; (D) allocation of assets
to a Vanguard Fund through a Plan. Separate Account or Contract as a
result of payments such as loan repayments, scheduled contributions,
retirement plan salary reduction contributions, or planned premium
payments to the Plan, Separate Account or Contract; or (E) prearranged
transfers at the conclusion of a required free look period.
(B) The term "Shareholder-Initiated Transfer Redemption" means a
transaction that is initialed or directed by the Shareholder that
results in a transfer of assets within a Plan, Separate Account or
Contract out of a Vanguard Fund, but does not include transactions
that are executed: (A) automatically pursuant to a contractual or
systematic program or enrollments such as transfers of assets within a
Plan, Separate Account or Contract out of a Vanguard Fund as a result
of loans, systematic withdrawal programs, Intermediary-approved asset
allocation programs and automatic rebalancing programs; (B) as a
result of any deduction of charges or fees under a Plan, Separate
Account or Contract; (C) within a Plan, Separate Account or Contract
out of a Vanguard Fund as a result of scheduled withdrawals or
surrenders from a Plan, Separate Account or Contract; or (D) as a
result of payment of a death benefit from a Plan, Separate Account or
Contract.
(C) The term "written" includes electronic writings and facsimile
transmissions.
(D) The term "purchase" does not include the automatic reinvestment of
dividends.
(E) The term "Shareholder" means the beneficial owner of Shares, whether
the Shares are held directly or by the Intermediary in nominee name.
For Plans, the term "Shareholder" means the Plan participant
notwithstanding that the Plan may be deemed to be the beneficial owner
of Shares. For Contracts, the term "Shareholder" means the holder of
interests in a Contract issued by the Intermediary.
(F) The term "Shares" mean the interests of Shareholders corresponding to
the redeemable securities of record issued by a Vanguard Fund that are
held by the Intermediary.
12
7. ADJUSTMENTS.
(a) Same Day Order Corrections. Vanguard will accept and honor corrections to
any Orders transmitted by the Intermediary through Fund/SERV in accordance with
the DCC&S Operating/Contingency Procedures.
(b) Overpayments. In the event that either party makes an overpayment to the
other party in connection with a Fund/SERV Order, the party that has been
overpaid will promptly repay the other party the total amount of such
overpayment upon receipt of notice of such overpayment. Notwithstanding the
foregoing, if any Plan, Plan participant or Contract owner has received cash in
excess of that to which it is entitled, the Intermediary will, when requested by
Vanguard, and to the extent practicable and permitted by law, debit or cause to
be debited from the Separate Account the amount of such excess, but only to the
extent of any cash in the account, and repay it to the affected Vanguard Fund.
Upon the request of Vanguard, and to the extent practicable, the Intermediary
shall provide Vanguard with the names of any Plan participant and Contract owner
and other relevant information concerning the affected accounts to assist
Vanguard in the collection of any such excess amount not repaid to the Vanguard
Funds.
(c) Processing Adjustments. Each Business Day the Intermediary and Vanguard
will reconcile their records so that an appropriate number of shares of each of
the Vanguard Funds is credited to the Intermediary's accounts on behalf of the
Separate Accounts invested in the Vanguard Funds.
(i) In the event of any error (other than a Pricing Error, as
hereinafter defined) or delay with respect to the procedures
outlined in this Agreement that is caused by Vanguard, Vanguard
shall make any adjustments on Vanguard's accounting system necessary
to correct such error or delay and shall reimburse the Intermediary
for any losses or reasonable costs incurred directly as a result of
the error or delay.
(ii) In the event of any error or delay in transmitting an Order that is
caused by the Intermediary and which is not corrected in accordance
with Section 7(a) above, the following provisions will apply:
(A) Upon receipt from the Intermediary of documentation sufficient in
Vanguard's sole discretion to establish the details of such Order
and the time at which it, or the corresponding Instruction, was
received from the Separate Account, Plan participant or Contract
owner by the Intermediary, Vanguard will correct its records to
reflect the Order as transmitted to Vanguard by the Intermediary;
and
(B) The Intermediary will promptly reimburse the Separate Account,
Vanguard and the Vanguard Funds for any losses or reasonable costs
incurred directly as a result of the error or delay. The
Intermediary agrees that, insofar as Vanguard and the Vanguard
Funds are concerned, such losses or reasonable costs will include,
at a minimum, any market or administrative costs associated with
effecting Orders on an "as of" basis or canceling such Orders.
(iii) The Intermediary and Vanguard, respectively, each agree to provide
the other prompt notice of any errors or delays of the type
referred to in this Section 7(c) and to use reasonable efforts to
take such action as may be appropriate to avoid or mitigate any
costs or losses resulting from such errors or delays.
(d) Pricing Errors. In the event of an error in the computation of a Vanguard
Fund's net asset value per share which, in accordance with procedures adopted by
the Fund's Board of Trustees consistent with views expressed by the SEC
regarding appropriate error correction standards, as shall be in effect or
amended from time to time, requires adjustment to Orders previously effected on
behalf of a Separate Account (a "Pricing
13
Error"), Vanguard shall notify the Intermediary as soon as possible after
discovery of the Pricing Error. Such notification may be oral, but shall be
confirmed promptly in writing. In such event, Vanguard shall reimburse the
affected Vanguard Fund for any loss (without taking into consideration any
positive effect of such Pricing Error) and shall make appropriate adjustments to
the Separate Accounts' Vanguard accounts, which adjustment shall net the impact
within the affected Separate Accounts of individual Plan participant and
Contract owner gains and losses; this will result in either a net payment to the
affected Separate Accounts from Vanguard (in the event of net Plan participant
and Contract owner losses) or from the affected Separate Accounts to Vanguard
(in the event of net Plan participant and Contract owner gains). In addition, in
the event that the Pricing Error causes the Intermediary to incur any direct
costs for re-processing Plan participant or Contract owner accounts within the
affected Separate Accounts, such as preparing and mailing revised statements,
Vanguard shall reimburse the Intermediary for all such reasonable costs upon
receipt from the Intermediary of an invoice or other statement documenting such
costs in reasonable detail.
8. CONTINGENCY PROCEDURES. In the case of any interruptions to the transmission
or receipt of Orders through Fund/SERV, the Intermediary will submit Orders to
Vanguard in accordance with the contingency procedures set forth in the DCC&S
Operating/Contingency Procedures, as in effect from time to time.
9. VANGUARD FUND INFORMATION.
(a) Vanguard will supply to the Intermediary upon request reasonably sufficient
supplies of the materials listed below for distribution to Plan participants and
Contract owners who hold interests in the Separate Accounts investing in
Vanguard Fund shares, which distribution shall be arranged by the Intermediary
to occur immediately upon the effective date of the materials or as soon
thereafter as practicable:
(i) All proxy or information statements prepared for circulation to
shareholders of record of a Vanguard Fund;
(ii) Annual and semi-annual reports; and
(iii) All updated prospectuses, supplements and amendments thereto.
(b) The Intermediary will timely deliver, or cause to be delivered, to Plan
participants and Contract owners all Vanguard Fund prospectuses, shareholder
reports, and proxy statements and related materials as required by applicable
laws, rules or regulations, rules or regulations of any self-regulatory
organization with jurisdiction over the Intermediary, and/or the Intermediary's
agreement with the Contract owner.
(c) The Intermediary shall furnish, or shall cause to be furnished, to Vanguard
or its designee, each piece of sales literature or other promotional material
prepared by or on behalf of the Intermediary in which Vanguard or any Vanguard
Fund is named, at least five Business Days prior to its use. The Intermediary
may use such material (i) in fewer than five Business Days if it receives the
written consent of Vanguard, or (ii) after five Business Days if Vanguard does
not reasonably object to such use within five Business Days after its receipt of
such material. No such material shall be used if Vanguard reasonably objects to
such use within five Business Days after receipt of such material. With regard
to any such sales literature or promotional material furnished by the
Intermediary to Vanguard, the Intermediary shall bear the sole responsibility
for complying with the content, approval, filing, and recordkeeping requirements
of FINRA Conduct Rule 2210, if and to the extent applicable. Notwithstanding the
foregoing, the Intermediary may use, and Vanguard authorizes the Intermediary to
use, the names or other identifying marks of, and certain information about,
Vanguard and the Vanguard Funds in fund fact sheets containing Vanguard
Fund-specific data furnished by Vanguard. Vanguard may withdraw the
authorization granted in this Section 9(c) as to any particular use of any such
name or identifying marks at any time (A) upon Vanguard's reasonable
determination that such use would have a material adverse effect on the
reputation or marketing efforts of Vanguard or a Vanguard Fund, which
determination may be due to the
14
availability of updated or modified information regarding a Vanguard Fund or
Vanguard, or (B) if any of the Vanguard Funds cease to be available under
Contracts through the Separate Accounts.
10. USE OF PARTIES' NAMES; NO PUBLICATION OF TERMS.
(a) Neither Vanguard nor the Intermediary shall make public the terms and
conditions of this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld; PROVIDED, HOWEVER, that if public
disclosure of such information is required by law, such consent shall be deemed
granted and the party required to disclose such information shall, if
practicable, notify the other party prior to such disclosure.
(b) Except as specifically permitted under this Agreement, without the other
party's prior written consent, neither party to this Agreement shall acquire any
right to use, nor shall use, cause or permit use of the names, characters,
artwork, designs, trade names, copyrighted materials, trademarks or service
marks of the other party, its related or subsidiary companies, parent,
employees, directors, shareholders, assigns, successors or licensees: (i) in any
advertising, promotional materials or activities, publicity, press release,
customer list, or public or private presentation or promotion; (ii) to express
or to imply any endorsement of such party or any of its affiliates or their
respective offerings or services; or (iii) in any manner other than expressly in
accordance with this Agreement or any other applicable agreement between the
parties and/or any of their respective affiliates.
11. PROPRIETARY INFORMATION AND PRIVACY. Each party hereto acknowledges that
the identities of the other party's customers (including, with respect to the
Intermediary, for purposes of this Section, Plan participants and Contract
owners), information maintained by such other party regarding those customers
("Customer Information"), and all computer programs and procedures developed by
such other party or such other party's affiliates or agents in connection with
such other party's performance of its duties hereunder constitute the valuable
property of such other party. Each party agrees that should it come into
possession of any Customer Information, or any other property, of the other
party, pursuant to this Agreement or any other agreement related to services
under this Agreement, the party who acquired such information or property shall
use its best efforts to hold such information in confidence and refrain from
using, disclosing, or distributing any of such information or other property,
except (a) as required or necessary to carry out the obligations imposed by this
Agreement, (b) with the other party's prior written consent, or (c) as required
by law or judicial process. Each party agrees to comply, at a minimum, with all
applicable privacy laws, including those promulgated pursuant to Title V of the
Xxxxx-Xxxxx-Xxxxxx Act of 1999. Each party agrees to maintain physical,
electronic and procedural safeguards reasonably designed to protect the
security, confidentiality, and integrity of, and to prevent unauthorized access
to or use of, Customer Information. Each party acknowledges that any breach of
the foregoing agreements as to the other party would result in immediate and
irreparable harm to such other party for which there would be no adequate remedy
at law and agrees that in the event of such a breach, such other party will be
entitled to equitable relief by way of temporary and permanent injunctions, as
well as such other relief as any court of competent jurisdiction shall deem
appropriate. Notwithstanding the foregoing, this Section shall not prohibit
either party from utilizing the other party's Customer Information for any
purpose whatsoever, if and to the extent such Customer Information: (i) is or
becomes a matter of public knowledge through no fault of such party; or (ii) was
in such party's possession or known by it prior to receipt from such other
party; or (iii) was rightfully disclosed to such party by another person without
restriction; or (iv) is independently developed by such party without access to
such other party's Customer Information.
12. INDEMNIFICATION.
(a) Vanguard. Vanguard will indemnify and hold harmless the Intermediary, and
each of the Intermediary's affiliates, divisions, subsidiaries, directors,
officers, agents, employees and permitted assigns, against and from any and all
losses, damages, costs, charges, payments, claims, liabilities and expenses
(including reasonable attorney's fees) arising out of or attributable to: (i)
Vanguard's lack of good faith,
15
negligence, or willful misconduct in carrying out its duties and
responsibilities relating to this Agreement; (ii) any breach of Vanguard's
representations and warranties contained in this Agreement; and (iii) any breach
by Vanguard of a material provision of this Agreement. In addition to the
foregoing, Vanguard will be liable for the losses and reasonable costs described
in Section 7(c)(i) of this Agreement.
(b) Intermediary. The Intermediary will indemnify and hold harmless Vanguard,
the Vanguard Funds, and each of their respective affiliates, divisions,
subsidiaries, directors, officers, agents, employees and permitted assigns,
against and from any and all losses, damages, costs, charges, payments, claims,
liabilities and expenses (including reasonable attorney's fees) arising out of
or attributable to: (i) the Intermediary's lack of good faith, negligence, or
willful misconduct in carrying out its duties and responsibilities relating to
this Agreement; (ii) any breach of the Intermediary's representations and
warranties contained in this Agreement; (iii) any breach by the Intermediary of
a material provision of this Agreement; and (iv) Vanguard's acceptance of any
Order from the Intermediary through Fund/SERV. In addition to the foregoing, the
Intermediary will be liable for the losses and reasonable costs described in
Section 7(c)(ii) of this Agreement.
(c) Notice and Opportunity to Defend. If any action, suit, proceeding, or
investigation is initiated, or any claim or demand is made, against any party
indemnified hereunder (an "Indemnified Party") with respect to which such
Indemnified Party may make a claim against the other party ("Indemnifying
Party") pursuant to this Section 12, then the Indemnified Party will give prompt
written notice of such action, suit, proceeding, investigation, claim or demand
to the Indemnifying Party. Thereafter, the Indemnifying Party will have the
opportunity, at its own expense and with its own counsel, to defend or settle
such action, suit, proceeding, investigation, claim or demand; PROVIDED,
HOWEVER,that: (i) the Indemnifying Party will keep the Indemnified Party
informed of all material developments and events relating to such action, suit,
proceeding, investigation, claim or demand; (ii) the Indemnified Party will have
the right to participate, at its own expense in the defense of such action,
suit, proceeding, investigation, claim or demand and will cooperate as
reasonably requested by the Indemnifying Party in the defense thereof; and (iii)
the Indemnifying Party will not settle such action, suit, proceeding,
investigation, claim or demand without the prior written consent of the
Indemnified Party, which consent will not be unreasonably withheld.
13. ROLE AND RELATIONSHIP OF THE INTERMEDIARY. The parties acknowledge and
agree that the services provided by the Intermediary under this Agreement are
not the services of an underwriter, principal underwriter, sub-distributor, or
dealer of any Vanguard Fund within the meaning of the 1933 Act or the 1940 Act.
This Agreement does not grant the Intermediary any right to purchase shares of
any Vanguard Fund (although it does not preclude the Intermediary from
purchasing any such shares), nor does it constitute the Intermediary an agent of
Vanguard or any Vanguard Fund for purposes of selling shares of any Vanguard
Fund to any dealer or the public, except as expressly stated in this Agreement
as to the receipt of Instructions from or on behalf of Plan participants and
Contract owners. To the extent the Intermediary is involved directly or
indirectly in the purchase of shares of any Vanguard Fund under this Agreement,
other than with respect to the acceptance of Instructions as described in
Section 1(a), such involvement will be as agent of the Plan participants,
Contract owners or Separate Accounts only.
14. RIGHT TO INSPECT. With respect to all Orders transmitted to Vanguard
through Fund/SERV pursuant to this Agreement, the Intermediary will maintain
records sufficient to document the truth of the representations and warranties
set forth in Section 4(b) of this Agreement, as well as the performance of the
obligations of the Intermediary set forth in this Agreement. The Intermediary
agrees to promptly furnish Vanguard with such information as Vanguard may
reasonably request from time to time in order for Vanguard to verify the
Intermediary's compliance with the provisions hereof (including, without
limitation, periodic certifications confirming such compliance and/or the
Intermediary's furnishing or making available for Vanguard's inspection records
sufficient to document the Intermediary's compliance with this Agreement).
16
15. AUTHORIZED PERSONS.
(a) For purposes of this Agreement, the Intermediary will designate "Authorized
Persons" entitled to act on its behalf in connection with this Agreement.
"Authorized Person" will mean any officer or employee of the Intermediary
designated by providing Vanguard with the following: (i) a properly certified
copy of a corporate resolution reflecting the vote of the Board of Directors of
the Intermediary authorizing the officer or employee, directly or indirectly, to
act in connection with this Agreement; and (ii) a specimen signature of such
officer or employee. This requirement may be satisfied by the Intermediary
furnishing Vanguard with a completed Vanguard Financial Advisor
Services/Organization Resolution form. Vanguard shall be entitled to act upon
all instructions received from such Authorized Persons until it receives and has
had a reasonable opportunity to act upon written notice from the Intermediary
that such persons are no longer authorized to act. Vanguard may disregard any
instructions not provided by an Authorized Person of the Intermediary.
(b) Except as set forth in this Agreement or as otherwise agreed upon in
writing by the parties, any communication or instruction made pursuant to this
Agreement may be made orally, provided such oral communication is promptly
confirmed in writing by facsimile or electronic transmission. The Intermediary
is entitled to rely on any communications or instructions that it reasonably
believes were provided to it by Vanguard. Vanguard is entitled to rely on any
communications or instructions that it reasonably believes were provided to it
by the Intermediary or its Authorized Persons.
16. COMMENCEMENT, AMENDMENT AND TERMINATION.
(a) Commencement. Fund/SERV transactions between Vanguard and the Intermediary
pursuant to this Agreement will not commence until both parties have
acknowledged in writing that all necessary preliminary testing has been
completed.
(b) Amendment. The Agreement may be modified or amended from time to time by
mutual written agreement of the parties, PROVIDED, HOWEVER, that Vanguard in its
sole discretion may modify the DCC&S Operating/Contingency Procedures,
Attachment A, and Exhibits D, E and F at any time by 30 days' advance written
notice to the Intermediary; and PROVIDED FURTHER, that Vanguard in its sole
discretion may modify Exhibits A and B at any time upon 60 days' advance written
notice to the Intermediary. Exhibit C may be modified by the party whose
frequent trading policy is contained therein upon reasonable advance written
notice to the other party.
(c) Termination. This Agreement will continue in effect until terminated by
either party by 60 days' advance written notice to the other. Any such
termination will not affect the completion of any pending Fund/SERV transactions
or obligations, and will not affect the indemnities given under this Agreement.
Notwithstanding the foregoing, Vanguard shall have the right to terminate this
Agreement at any time without prior notice to the Intermediary in the event of
excessive transactions or other abusive investment practices, as determined by
Vanguard in its sole discretion. Upon any such termination, the Intermediary
will immediately refrain from transmitting Orders to Vanguard through Fund/SERV.
17. NON-EXCLUSIVITY. Each party acknowledges that the other may enter into
agreements similar to this Agreement with other parties for the performance of
services similar to those to be provided under this Agreement, unless otherwise
agreed to in writing by the parties.
18. CONFLICTING AGREEMENTS. This Agreement (including any Exhibits, Attachments
and Schedules hereto) constitutes the entire agreement between the parties as to
the subject matter hereof and supersedes any and all agreements, representations
and warranties, written or oral, regarding such subject matter made prior to the
time
17
at which this Agreement has been executed and delivered by the Intermediary and
Vanguard, including, without limitation, any prior DCC&S agreement. Nothing
contained in this Agreement, however, will be construed to limit or restrict
either party's compliance with any law, regulation or order to which the party
is subject, or to prevent the parties from supplementing this Agreement by
agreeing to additional duties, obligations, representations, warranties or
higher standards of care with respect thereto.
19. EXHIBITS, ATTACHMENTS AND SCHEDULES. All Exhibits, Attachments and
Schedules attached to this Agreement, as they may be amended from time to time,
are by this reference incorporated into and made a part of this Agreement.
20. ASSIGNMENT. Neither Vanguard nor the Intermediary may assign this Agreement
without the prior written consent of the other party, and any attempted
assignment without such consent will be null and void.
21. COOPERATION. The parties agree to cooperate with each other in any
recordkeeping or reporting necessary to fulfill any governmental or regulatory
requirement. In addition, the Intermediary agrees to provide Vanguard with any
of the records described in Section 4(b)(viii) promptly upon Vanguard's request.
22. GOVERNING LAW. This Agreement will be governed by and its provisions will
be construed in accordance with the internal laws of the Commonwealth of
Pennsylvania.
23. SEVERABILITY. If any provision of this Agreement is held to be invalid, the
remaining provisions of this Agreement will continue to be valid and
enforceable.
24. WAIVER. The failure of a party to insist upon strict adherence to any
provision of this Agreement on any occasion will not be considered a waiver nor
will it deprive such party of the right thereafter to insist upon strict
adherence to that provision or any other provision of this Agreement.
25. NOTICES. Any notice required or permitted hereunder will be in writing and
will be given by personal service, mail or facsimile to the other party at the
address set forth below (or such other address as the other party may specify by
written notice to the first party). Notice will be effective upon receipt if by
mail, on the date of personal delivery (by private messenger, courier service or
otherwise), or upon receipt of facsimile, whichever occurs first, at:
Vanguard: The Vanguard Group, Inc.
000 Xxxxxxxx Xxxxxxxxx, 000
Xxxxxxx, XX 00000
Attention: Principal, Financial Advisor Services
Operations
Fax No.: (000) 000-0000
Copy to: The Vanguard Group, Inc.
Legal Department, V26
000 Xxxxxxxx Xxxx.
Xxxxxxx, XX 00000
Attention: Intermediary Agreements
Fax No.: (000) 000-0000
Intermediary: Hartford Life Insurance Company, Inc.
Law Department, B1-E
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
18
Funds Management Group
Fax No.: 000-000-0000
26. ANTI-MONEY LAUNDERING POLICIES. To the extent applicable, each party hereto
agrees to comply with and, establish and maintain policies and procedures
required by, federal, state or local law to detect and prevent money laundering,
including but not limited to, cash and suspicious activity reporting and
recordkeeping requirements, and customer identification program requirements, as
well as creation and implementation of policies, procedures and internal
controls in order to ensure compliance, and any additional policies or
procedures required by the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001. Each party further agrees to cooperate and share information with
the other to the extent required by law to facilitate implementation of each
other's anti-money laundering program. The Intermediary agrees that it will take
reasonable steps to monitor investor transactions to identify currency, cash
equivalents, possible money laundering and other suspicious activity and to
report to government authorities reportable currency transactions, and where
appropriate, suspicious activity.
27. FORCE MAJEURE. In the event a party is unable to perform its obligations
under the terms of this Agreement because of acts of God, acts of terrorism,
strikes, equipment failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for damages
resulting from such failure to perform or otherwise from such causes.
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on their behalf by their duly authorized officers as of the date first written
above.
THE VANGUARD GROUP, INC.
/s/ Xxxxxxx X. Xxxx
-----------------------------------
By:
Title: Principal
INTERMEDIARY
Intermediary Name:
HARTFORD LIFE INSURANCE COMPANY,
INC.
/s/ Xxxxx X. Xxxxx
-------------------------------------
By: Xxxxx X. Xxxxx
Title: Assistant Vice President
20
OPERATING AND CONTINGENCY PROCEDURES/
DEFINED CONTRIBUTION CLEARANCE & SETTLEMENT
A. OPERATING PROCEDURES
1. TRADE DATE POLICY AND PROCEDURES. Orders for the purchase, redemption or
exchange of Vanguard Fund shares will be accorded a trade date ("T") that is the
date of receipt of the Order by the Intermediary from the Plan or participant,
subject to the special rules provided in these DCC&S Operating/Contingency
Procedures.
(a) Receipt of Orders. Orders must be received by the Intermediary by the close
of trading on the New York Stock Exchange (the "Market Close") on T. Any Order
received by the Intermediary after such time will be accorded a trade date that
is the next Business Day following receipt of the Order ("T+1"), and the
Intermediary will not enter the Order onto Fund/SERV until T+2.
(b) Entry of Fund/SERV Transmissions. The Intermediary is responsible for
sending all and only Orders received prior to the Market Close on T to Vanguard
through Fund/SERV by NSCC Cycle 7 on T+1 (received by Vanguard at approximately
7:00 a.m. Eastern time). Transactions may be entered in dollars or shares.
(c) Correction of Fund/SERV Entries. The Intermediary may correct an
erroneously entered Order by first calling Vanguard's NSCC Services Unit at
(000) 000-0000 not later than 9:00 a.m. Eastern time on T+1. If required, a
subsequent Fund/SERV entry may be submitted not later than NSCC Cycle 12 on T+1
(received by Vanguard at approximately 10:00 a.m. Eastern time); PROVIDED,
HOWEVER, that Vanguard reserves the right to reject any Fund/SERV correction for
which the Intermediary has not provided Vanguard with documentation (if
requested by Vanguard) sufficient, in Vanguard's sole discretion, to prove the
occurrence of the error.
(d) As-of Orders. An Order transmitted by the Intermediary via Fund/SERV
indicating a trade date (the "Indicated Trade Date") prior to the Business Day
preceding the date of transmission to and receipt by Vanguard (an "As-of Order")
may, in Vanguard's sole discretion, be accorded a trade date (and corresponding
trade price) that is the Indicated Trade Date, subject to the following
conditions, as applicable:
(i) Automatic Processing. As-of Orders that satisfy each of the
following conditions will be accepted and processed by Vanguard as
of the Indicated Trade Date on the As-of Order:
(A) The As-of Order was received by the Intermediary on the Indicated
Trade Date in accordance with all applicable requirements under
this Agreement;
(B) The amount of the As-of Order does not exceed the lesser of (1)
$25,000 and (2) the Large Transaction Amount for the relevant
Vanguard Fund;
(C) The Indicated Trade Date is not more than two Business Days prior
to the Business Day on which the As-of Order is received by
Vanguard; and
(D) The Intermediary transmits the As-of Order with one of the
following NSCC Extended Correction Reason Codes ("As-of Reason
Codes"): (01) Incorrect Account Number; (02) Incorrect Share
Quantity; (03) Incorrect Security Issue ID; (07) Blue Sky
Violation; or (08) Price Revision.
21
(ii) Discretionary Processing. The Intermediary shall notify Vanguard of
its intent to transmit an As-of Order that falls within any of the
categories listed below, and/or of its intent to transmit more than
one As-of Order on a single Business Day, by calling Vanguard's NSCC
Services Unit between 6:30 a.m. and 8:30 p.m. Eastern time on the
Business Day on which such As-of Order(s) is (are) transmitted to
Vanguard. Any such As-of Order(s) will be suspended by Vanguard upon
receipt and will be processed as of the Indicated Trade Date only if
(x) the Intermediary has provided the required notification and (y)
Vanguard approves die As-of Order(s) upon review, subject to the
requirements of Section 1(d)(iii) below.
(A) As-of Orders for Closed Funds;
(B) As-of Orders in an amount equal to or greater than the lesser of
(1) $25,000 and (2) the Large Transaction Amount for the relevant
Vanguard Fund;
(C) As-of Orders with an Indicated Trade Date more than two Business
Days prior to the Business Day on which the As-of Order is
received by Vanguard;
(D) As-of Orders with an As-of Reason Code of (06) Other; and
(E) As-of Orders for which an original rejected Order is not readily
identifiable by Vanguard.
Any such As-of Orders received by Vanguard on a Business Day between NSCC Cycles
8 and 14 will be reviewed and either approved or disapproved by 1:00 p.m.
Eastern time on such Business Day, after which time Vanguard will notify the
intermediary by telephone of the decision. Any such As-of Orders received by
Vanguard on a Business Day between NSCC Cycles 15 and 98 will be reviewed and
either approved or disapproved by 10:00 A.M. Eastern time on the following
Business Day, after which time Vanguard will notify the Intermediary by
telephone of the decision.
(iii) Additional Documentation. In connection with any As-of Order
transmitted by the Intermediary pursuant to Section 1(d)(ii) above,
Vanguard may request additional documentation from the Intermediary
in connection with its review process. Such documentation may
include evidence of the date and time of receipt of the original
Order from the Plan or participant, a letter of indemnification
from the Intermediary, and/or an affidavit from the Plan or
participant or a representative of the Intermediary as to the facts
supporting the As-of Order. Vanguard must receive any documentation
requested from the Intermediary via facsimile to (000) 000-0000 not
later than 9:00 p.m. Eastern time on the transmission date of the
As-of Order.
(iv) Rejection of As-of Orders. The following As-of Orders shall be
rejected by Vanguard:
(A) Any As-of Order submitted by the Intermediary that does not meet
the requirements set forth in Section 1(d)(i) above and that is
not approved by Vanguard pursuant to Section 1(d)(ii) above;
(B) Any As-of Order that includes an Indicated Trade Date that is 61
or more calendar days prior to the Business Day on which Vanguard
receives such As-of Order;
(C) Any As-of Order requiring Intermediary notification pursuant to
Section 1(d)(ii) above for which notification is not provided
(rejected on the Business Day after receipt by Vanguard);
22
(D) Any As-of Order requiring additional documentation from the
Intermediary pursuant to Section 1(d)(iii) above for which
appropriate documentation is not timely provided (rejected on the
Business Day after receipt by Vanguard); and
(E) Any As-of Order that includes an As-of Reason Code of (04) Customer
Renege, (05) Incorrect Sales Charge, or (00) Not Applicable.
(v) Settlement of As-of Orders. Any As-of Order received, approved (if
required) and processed by Vanguard pursuant to Sections 1(d)(i) or
1(d)(ii) shall settle via the NSCC (A) on the next Business Day, if
received and approved by Vanguard prior to 8:00 p.m. Eastern time on
a Business Day, and (2) on the second following Business Day, if
received and approved by Vanguard after 8:00 p.m. Eastern time on a
Business Day.
(vi) Reimbursement of As-of Impact. The Intermediary's transmission to
Vanguard of an As-of Order with an Indicated Trade Date more than
two Business Days prior to the transmission date shall constitute
the Intermediary's agreement to reimburse Vanguard for any negative
impact to the affected Vanguard Fund that (A) results from
Vanguard's processing of such As-of Order as of the Indicated Trade
Date and (B) is equal to or greater than $250 (the "As-of Impact").
Vanguard will notify the Intermediary of any As-of Impact as soon as
practicable after Vanguard's receipt, and prior to Vanguard's
processing, of such As-of Order.
(vii) Suspension of As-of Privilege. Vanguard reserves the right to
suspend the Intermediary's ability to transmit As-of Orders at any
time, without prior notice to the Intermediary, if Vanguard
determines, in its sole discretion, that the Intermediary has
engaged in excessive or abusive as-of trading, has failed to
reimburse As-of Impact where required, has failed to meet the
applicable requirements set forth in this Section 1(d), or is
otherwise in breach of the terms of this Agreement. Effective upon
any such suspension. As-of Orders transmitted by the Intermediary
will be systematically rejected by Vanguard.
(e) Errors not Timely Corrected and Delayed Entries. Any error or delay in
transmitting an Order that is caused by the Intermediary and that is not
corrected in accordance with Part A, Sections 1(c) or 1(d) of these Operating
Procedures, will be handled as described in Section 7(c) of the Agreement.
(f) Resubmission of Certain Orders. Any Order timely entered onto Fund/SERV by
the Intermediary which is rejected by either Vanguard or the NSCC (other than as
a result of an NSCC Outage, as defined below) may, in Vanguard's sole
discretion, be accorded a trade date (and corresponding trade price) that is the
date of receipt of the order by the Intermediary (T) if all of the following
conditions are satisfied:
(i) The Intermediary calls Vanguard not later than 8:30 a.m. Eastern
time on T+1 to notify Vanguard of its intent to resubmit the order
on T+1;
(ii) Upon receipt of such notification, Vanguard authorizes the
Intermediary to resubmit such order;
(iii) Such order is resubmitted on T+1 via NSCC Cycle 12 and is received
by Vanguard not later than l0:00 a.m. Eastern time on T+1; and
(iv) If such order was rejected by the NSCC for system-related reasons,
the Intermediary shall submit such order to Vanguard via facsimile
to (000) 000-0000, and such facsimile shall be received by Vanguard
not later than 10:00 a.m. Eastern time on T+1.
23
All such resubmitted Orders that are accepted by Vanguard shall settle in
accordance with the settlement procedures set forth herein. Notwithstanding the
foregoing, Vanguard reserves the right to reject any Plan purchase Order, and to
delay settlement or redeem in kind any Plan redemption Order, resubmitted on T+1
with an intended trade date (and trade price) of T if Vanguard, in its sole
discretion, deems such Order to be disruptive or detrimental to the applicable
Vanguard Fund. Any Plan purchase Order so rejected will be accorded a trade date
of T+1, subject to applicable Extraordinary Plan Event limitations set forth in
the Agreement.
2. SETTLEMENT POLICY AND PROCEDURES. Settlement far all Orders effected
pursuant to this Agreement will occur on a T+1 basis, in same day funds, through
the NSCC, unless an Order is submitted manually, in which case settlement of
Plan purchase Orders will occur on a T+1 basis and settlement of Plan redemption
Orders will occur on a T+2 basis, in each case by wire transfer in accordance
with the procedures set forth below. All NSCC settlements will be subject to the
rules and procedures of the NSCC, including such rules or procedures as may
concern the payment of interest on failed settlements.
3. FIRM EXITS. A Firm Exit transaction transmitted to Vanguard by the
Intermediary via Fund/SERV (a "Firm Exit") relating to an Order previously
transmitted by the Intermediary via Fund/SERV (the "Original Order") may, in
Vanguard's sole discretion, be accepted and processed, with the effect of
canceling the Original Order, subject to the following conditions, as
applicable:
(a) Automatic processing. Firm Exits that satisfy each of the following
conditions will be accepted and processed by Vanguard:
(i) The Original Order was incorrect as a result of the Intermediary's
error;
(ii) The Firm Exit identifies the Original Order to which it relates;
(iii) The amount of the Firm Exit is less than the Large Transaction
Amount for the relevant Vanguard Fund; and
(iv) The Firm Exit is received by Vanguard prior to NSCC settlement of
the Original Order.
Any Firm Exit transmitted by the Intermediary after NSCC settlement of the
Original Order shall be rejected by the NSCC.
(b) Discretionary Processing. The Intermediary shall notify Vanguard of its
intent to transmit a Firm Exit that falls within either of the categories listed
below by calling Vanguard's NSCC Services Unit between 6:30 a.m. and 8:30 p.m.
Eastern time on the Business Day on which such Firm Exit(s) is (are) transmitted
to Vanguard. Any such Firm Exit(s) will be suspended by Vanguard upon receipt
and will be approved and processed only if (x) the Intermediary has provided the
required notification and (y) Vanguard approves the Firm Exit(s) upon review,
subject to the requirements of Section 3(c) below.
(i) A Firm Exit in an amount equal to or greater than the Large
Transaction Amount for the relevant Vanguard Fund; or
(ii) Multiple Firm Exits in the same Vanguard Fund transmitted on the
same Business Day which aggregate to an amount equal to or greater
than the Large Transaction Amount for the relevant Vanguard Fund;
24
Any such Firm Exit(s) received by Vanguard on a Business Day between NSCC Cycles
8 and 14 and relating to an Original Order with a trade date of the immediately
preceding Business Day will be reviewed and either approved or disapproved by
1:00 p.m. Eastern time on such Business Day, after which time Vanguard will
notify the Intermediary by telephone of the decision. Any such Firm Exits
received by Vanguard on a Business Day between NSCC Cycles 15 and 98 and
relating to an Original Order with a trade date of such Business Day will be
reviewed and either approved or disapproved by 10:00 A.M. Eastern time on the
following Business Day, after which time Vanguard will notify the Intermediary
by telephone of the decision.
(c) Additional Documentation. In connection with any Firm Exit transmitted by
the Intermediary and described in Section 3(b) above, Vanguard may request
additional documentation from the Intermediary in connection with its review
process. Such documentation may include evidence of the date and time of receipt
of the Original Order from or on behalf of the Plan or Plan participant, a
letter of indemnification from the Intermediary, and/or an affidavit from the
Plan or Plan participant or a representative of the Intermediary as to the facts
supporting the Firm Exit. Vanguard must receive any documentation requested from
the Intermediary via facsimile to (000) 000-0000 not later than 9:00 p.m.
Eastern time on the transmission date of the Firm Exit.
(d) Rejection of Firm Exits. The following Firm Exits may be rejected by
Vanguard by notification to the Intermediary, regardless of the fact that such
Firm Exit is received by Vanguard and is reflected in the NSCC Settlement for
the relevant date:
(i) Any Firm Exit submitted by the Intermediary that does not meet the
requirements set forth in Section 3(a) above and that is not
approved by Vanguard pursuant to Section 3(b) above;
(ii) Any Firm Exit requiring Intermediary notification pursuant to
Section 3(b) above for which notification is not provided (rejected
on the Business Day after receipt by Vanguard); and
(iii) Any Firm Exit requiring additional documentation from the
Intermediary pursuant to Section 3(c) above for which appropriate
documentation is not timely provided (rejected on the Business Day
after receipt by Vanguard).
(e) Settlement of Certain Firm Exits.
(i) Any Firm Exit received and processed by Vanguard pursuant to Section
3(a) or Section 3(b) shall be reflected in the NSCC settlement
occurring on the Business Day immediately following the trade date
of the Original Order.
(ii) Any Firm Exit approved by Vanguard pursuant to Section 3(b) or
rejected by Vanguard pursuant to Section 3(d) may require the
Intermediary's reimbursement of Firm Exit Impact (as defined below)
or a supplemental manual settlement, as follows:
(A) Reimbursement of Firm Exit Impact. The Intermediary's transmission
to Vanguard of a Firm Exit described in Section 3(b) or 3(d) above
shall constitute the Intermediary's agreement to reimburse Vanguard
for any negative impact to the affected Vanguard Fund that (1)
results from Vanguard's processing of such Firm Exit and (2) is
equal to or greater than $250 (the "Firm Exit Impact"). Vanguard
will notify the Intermediary of any Firm Exit Impact as soon as
practicable after Vanguard's receipt of such Firm Exit.
(B) Supplemental Manual Settlement. Notwithstanding any prior NSCC
settlement reflecting a Firm Exit, if Vanguard reasonably
determines that a Firm Exit described in Sections 3(b)
25
or 3(d) should not be honored as a legal matter or as a matter of Vanguard
policy, Vanguard will notify the Intermediary, promptly after such
determination, of the reinstatement of the Original Order, as of its original
trade date, and such Original Order will be settled by Vanguard and the
Intermediary in accordance with the provisions of Section 6 below.
(f) Review of Firm Exit Privilege. Vanguard reserves the right to review the
Intermediary's use of the Firm Exit privilege described in this Section 3 in
order to determine whether the Intermediary has engaged in excessive or abusive
Firm Exit trading, has failed to reimburse Firm Exit Impact or complete
supplemental settlements where required, has failed to meet the applicable
requirements set forth in this Section 3, or is otherwise in breach of the terms
of this Agreement. In any such case, Vanguard may terminate this Agreement
pursuant to the applicable termination provisions.
4. NEW ACCOUNTS. In order to establish a new account in the Vanguard Funds, the
Intermediary will transmit account registration information via Fund/SERV to
Vanguard in the established NSCC format. The Intermediary will also complete and
submit to Vanguard the Firm Information Form, attached to this Agreement as
Exhibit E. The account registration information is required one Business Day in
advance of the initial purchase. In addition, where the new account is opened in
the name of an underlying Plan, under that Plan's taxpayer identification
number, the Intermediary will immediately mail Vanguard hard copy documentation
of the foregoing in the form required by Vanguard. For each new account opened
for a Plan trust, the Intermediary will complete and submit to Vanguard the
Trust Information Form, attached to this Agreement as Exhibit F. With respect to
any omnibus accounts, or any other accounts which the Intermediary controls, the
Intermediary shall complete master account registration documentation for each
taxpayer identification number; that documentation shall apply to all
identically registered accounts to which the taxpayer identification numbers
apply. The Intermediary may not transmit any Orders to Vanguard through
Fund/SERV, unless and until the Intermediary has established the accounts to
which such Orders relate as provided herein. As used herein, "new account" means
an account with a different registration than any existing account of the
Intermediary.
5. MANUAL SETTLEMENT PROCEDURES.
(a) Manual Purchases. Subject to the terms and conditions set forth herein, in
the case of any Plan purchase Order for shares of a Vanguard Fund that is
transmitted to Vanguard by the Intermediary other than through Fund/SERV in
accordance with all applicable requirements of this Agreement (a "Manual
Purchase"), Vanguard shall credit the Intermediary's or the Plan's account with
the purchase of such shares on a Delayed Settlement basis.
(b) Manual Redemptions. Subject to the terms and conditions set forth herein,
in the case of any Plan redemption Order for shares of a Vanguard Fund that is
transmitted to Vanguard by the Intermediary other than through Fund/SERV in
accordance with all applicable requirements of this Agreement (a "Manual
Redemption"), Vanguard shall debit the Intermediary's or the Plan's account in
the number of shares covered by such Plan redemption Order on a Delayed
Settlement basis.
For these purposes, "Delayed Settlement" shall mean that, as applicable, (i)
shares of a Vanguard Fund may be credited to the Intermediary's or the Plan's
account at the share price calculated on the date of the Intermediary's receipt
of the Plan purchase Order (T) notwithstanding the fact that Vanguard will not
receive the settlement proceeds for the Purchase Amount of such Manual Purchase
until the next Business Day following the Intermediary's receipt of such Order
(T+1), or (ii) shares of a Vanguard Fund may be redeemed from the Intermediary's
or the Plan's account at the share price calculated on the date of the
Intermediary's receipt or the Plan redemption Order (T) notwithstanding the fact
that Vanguard will not deliver the settlement proceeds for the Redemption Amount
until the second Business Day after the Intermediary's receipt of such Order
(T+2). "Purchase Amount" shall mean, with respect to any Manual Purchase, the
total
26
dollar value of shares to be purchased (including any applicable purchase or
transaction fees). "Redemption Amount" shall mean, with respect to any Manual
Redemption, the total dollar value of shares to be redeemed (including any
applicable redemption or transaction fees).
(c) Wiring of Funds. The Intermediary shall remit the Purchase Amount to
Vanguard by Federal Funds wire by 4:00 p.m. Eastern time on T+1 in accordance
with the wire instructions set forth below. Vanguard shall remit the Redemption
Amount to the Intermediary by Federal Funds wire by 4:00 p.m. Eastern time on
T+2 in accordance with the wire instructions set forth below.
(d) Failed Trades. In the event that a Manual Purchase results in a Failed Trade
(as hereinafter defined), Vanguard reserves the right, in its sole discretion,
to cancel such Manual Purchase or the portion thereof that represents the Failed
Trade. The Intermediary shall reimburse each Vanguard Fund affected by a Failed
Trade for any and all losses that it suffers as a result of such Failed Trade,
including, but not limited to, any market losses. At a minimum, losses resulting
from a Failed Trade shall be deemed to include an amount calculated as (x) the
Purchase Amount minus the amount of any Federal Funds wire timely received by
Vanguard in connection with the Failed Trade, multiplied by (y) the Federal
Funds Effective Rate on the day of the Failed Trade, multiplied by (z) 1/360.
For these purposes, "Federal Funds Effective Rate" shall mean the average
federal funds rate, as computed by the Federal Reserve Bank of New York.
(i) A Failed Trade shall mean any Manual Purchase or portion thereof
with respect to which Vanguard has not received the Purchase Amount
in the form of a Federal Funds wire by 4:00 p.m. Eastern Time on
T+1, "Federal Funds" shall mean monies credited to a Vanguard Fund's
transfer agent bank by a Federal Reserve Bank.
(ii) Vanguard may determine, in its sole discretion, that a Failed Trade
did not result from the Intermediary's action or omission. In the
event that such a determination is made, Vanguard may elect to waive
all or part of the reimbursement described above.
(e) Additional Limitations on Delayed Settlement. Delayed Settlement shall be
subject to the following additional provisions:
(i) With respect to any Manual Purchase, only the Purchase Amount
designated when placing the Manual Purchase shall be credited to the
Intermediary's or the Plan's account on a Delayed Settlement basis.
Any amount received by Vanguard in excess of the Purchase Amount
shall be handled as directed by the Intermediary upon notice from
Vanguard.
(ii) With respect to any Failed Trade, if a portion of the Purchase
Amount is timely received by Vanguard (i.e., in the form of a
Federal Funds wire by 4:00 p.m. Eastern Time on T+1), then the
amount so received shall be credited to the Intermediary's or the
Plan's account on a Delayed Settlement basis.
(iii) Notwithstanding any other provision of this Agreement, in the case
of any Manual Purchase or portion thereof that has been deemed a
Failed Trade, any portion of the Purchase Amount thereafter
received by Vanguard shall be handled as directed by the
Intermediary upon notice from Vanguard.
27
(f) Wire Instructions.
VANGUARD:
WIRE TO: FRB ABA 000000000
HSBC, New York
FOR CREDIT Account: 000112046
TO: Vanguard Incoming Wire Account
IN FAVOR OF: NSCC ID #
Attn NSCC Unit x 19464
Registration Name
INTERMEDIARY: PLEASE COMPLETE
WIRE TO: FRB ABA #
Bank Name
FOR CREDIT Account #
TO: Account Name
IN FAVOR OF: Registration Name
B. CONTINGENCY PROCEDURES
1. INTERMEDIARY OUTAGES. In the case of any interruptions to the transmission or
receipt of Orders through Fund/SERV that are due to problems or errors at the
Intermediary (an "Intermediary Outage"), the following procedures shall be
followed:
(a) The Intermediary shall immediately notify Vanguard's NSCC Services Unit
at (000) 000-0000 of the Intermediary Outage.
(b) If the Intermediary will not be able to submit Orders to Vanguard by
NSCC Cycle 7 on T+1 (received by Vanguard at approximately 7.00 a.m.
Eastern time), the Intermediary will call Vanguard's NSCC Services Unit at
(000) 000-0000 not later than 8:30 a.m. Eastern time on T+1 in order to
notify Vanguard of the Intermediary Outage and to provide aggregated net
purchase or redemption information, by Vanguard Fund, with respect to the
Orders received on T. If possible, the Intermediary will submit the Orders
received on T, that could not previously be transmitted via Fund/SERV, via
NSCC Cycle 12 on T+1 (received by Vanguard at approximately 10:00 a.m.
Eastern time); otherwise, the Intermediary will submit such Orders, with
all appropriate details, via facsimile to (000) 000-0000 not later than
10:00 a.m. Eastern time on T+1.
(c) If any correction or termination of the Intermediary Outage results in
the duplicate transmission via Fund/SERV of Orders previously submitted to
Vanguard via the manual process outlined in Part B. Section 1(b) above, the
Intermediary will be responsible for any costs or losses associated with
the cancellation of such duplicate Orders unless the Intermediary calls
Vanguard's NSCC Services Unit at (000) 000-0000 not later than 10:00 a.m.
Eastern time on T+1 and provides sufficient information with respect to the
duplicated Orders to enable Vanguard to cancel the manually submitted
Orders. In such event, the Orders transmitted via Fund/SERV, if timely
received by Vanguard, shall be processed by Vanguard in accordance with its
usual procedures set forth in Part A.
2. NSCC OUTAGES. In the case of any interruptions to the transmission or receipt
of Orders through Fund/SERV that are due to problems or errors at the NSCC (an
"NSCC Outage"), the following procedures shall be followed:
(a) The Intermediary or Vanguard shall notify the other immediately upon
becoming aware of an NSCC Outage.
28
(b) If the Intermediary reasonably believes that it will not be able to
submit Orders to Vanguard by NSCC Cycle 7 on T+1, the Intermediary will
call Vanguard's NSCC Services Unit at (000) 000-0000 not later than 8:30
a.m. Eastern time on T+1 in order to in order to notify Vanguard of the
NSCC Outage and to provide aggregated net purchase or redemption
information, by Vanguard Fund, with respect to the Orders received on T. If
possible, the Intermediary will submit the Orders received on T, that could
not previously be transmitted via Fund/SERV, via NSCC Cycle 12 on T+1
(received by Vanguard at approximately 10:00 a.m. Eastern time); otherwise,
the Intermediary will submit such Orders, with all appropriate details, via
facsimile to (000) 000-0000 not later than 10:00 a.m. Eastern time on T+1.
(c) If any correction or termination of the NSCC Outage may result in the
duplicate transmission via Fund/SERV of Orders previously submitted to
Vanguard via the manual process outlined in Part B, Section 2(b) above
(I.E., if Orders previously entered onto Fund/SERV by the Intermediary were
suspended as a result of the NSCC Outage), the Intermediary will be
responsible for any costs or losses associated with the cancellation of
duplicate Orders unless the Intermediary calls Vanguard's NSCC Services
Unit at (000) 000-0000 not later than 10:00 a.m. Eastern time on T+1 and
provides sufficient information with respect to the potentially duplicated
Orders to enable Vanguard to cancel the manually submitted Orders. In such
event, the Orders transmitted via Fund/SERV, if timely received by
Vanguard, shall be processed by Vanguard in accordance with its usual
procedures set forth in Part A.
3. VANGUARD OUTAGES. In the case of any interruptions to the transmission or
receipt of Orders through Fund/SERV that are due to problems or errors at
Vanguard (a "Vanguard Outage"), the following procedures shall be followed:
(a) The Intermediary shall continue to transmit Orders via Fund/SERV in
accordance with the procedures outlined in the Operating Procedures in Part
A above.
(b) Vanguard will be responsible for any costs or losses associated with
processing and settling, as of the appropriate trade date, Orders timely
entered onto Fund/ SERV by the Intermediary during the Vanguard Outage.
29
EXHIBIT A
REDEMPTION FEE PROCEDURES
A. REDEMPTION FEE PROCEDURES
1. Beginning on the date on which the Intermediary offers any shares of a
Vanguard Fund that imposes a redemption fee, the Intermediary will assess a
redemption fee on shares of each Vanguard Fund specified below where such shares
are redeemed by a Separate Account as a result of a Plan participant's exchange
out of the sub-account investing in the Vanguard Fund within the specified
holding period after purchase of such shares by the Separate Account as a result
of a Plan participant's exchange into the sub-account investing in the Vanguard
Fund (the "Redemption Fee"), For purposes of tracking and assessing the
Redemption Fee, all Separate Account acquisitions of Vanguard Fund shares as a
result of(a) a Plan participant exchange into the sub-account investing in the
Vanguard Fund, (b) an asset transfer within a Plan, or (c) a rollover shall be
considered "purchases" (a "Purchase"), and all Separate Account dispositions of
Vanguard Fund shares as a result of a Plan participant exchange out of the
sub-account investing in the Vanguard Fund shall be considered "redemptions" (a
"Redemption"), For purpose of these procedures, "exchange out" means a Plan
participant transaction in which proceeds from a Plan participant redemption of
interests in a sub-account investing in the Vanguard Fund shares are used to
purchase another investment offered within the Plan.
2. The Redemption Fee holding period begins at the date of the Purchase, and
the Redemption Fee will be charged on Redemptions that occur before the end of
the Vanguard Fund's holding period. In determining whether and to what extent
the Redemption Fee applies to any particular Redemption, a Separate Account's
shares that are (a) attributable to the transacting Plan participant and (b)
exempt from the Redemption Fee are redeemed first. The Intermediary shall then
use a first-in first-out method of accounting for Purchases and Redemptions,
meaning that a Separate Account's oldest shares attributable to the transacting
Plan participant are redeemed prior to more recently acquired shares.
3. The following transactions will not be considered Purchases or Redemptions,
as applicable, for purpose of these Redemption Fee Procedures:
(a) Purchases of Vanguard Fund shares as a result of Plan participant
payroll or employer contributions;
(b) Distributions, loans, and in-service withdrawals from Plans;
(c) Redemptions or transfers of shares as a result of a Plan termination
or at the direction of a Plan;
(d) Purchases of shares by reinvestment of dividend or capital gain
distributions;
(e) Rollovers to individual retirement accounts (IRAs);
(f) XXX conversions and recharacterizations;
(g) Re-registrations of shares in the same Vanguard Fund;
(h) Conversions from one share class to another in the same Vanguard
Fund;
(i) Transactions in Section 529 College Savings Plan accounts; and
(j) Redemptions of shares to pay fund or account fees.
4. Reallocation and rebalancing transactions completed by Plan participants,
investment advisors, or investment advisory services will NOT be exempt from
Redemption Fees.
5. Vanguard Fund Redemption Fee holding periods shall be calculated using
calendar dates and shall include trade dates.
30
6. The Intermediary shall be responsible for the calculation and remittance of
the correct amount of Redemption Fees.
7. (a) PREFERRED METHOD. If the Intermediary elects to utilize the NSCC's
Short-Term Redemption Fee Processing Automation, the Redemption Fee shall be
processed and settled through the Fund/SERV STR functionality, in accordance
with applicable NSCC rules and procedures and any supplemental information or
clarification furnished to the Intermediary in writing by Vanguard from time to
time.
(b) ALTERNATE METHOD. If the Intermediary does not elect to utilize the NSCC's
Short-Term Redemption Fee Processing Automation, the Redemption Fee shall be
withheld from the redemption proceeds of each Redemption of Vanguard Fund
shares, and shall be remitted to Vanguard monthly, or more frequently as the
parties shall agree, as follows. Redemption Fees due as a result of transactions
processed during each calendar month shall be accumulated and remitted via
Federal Funds wire received by Vanguard no later than 4:00 p.m. Eastern time on
the fifth Business Day of the following calendar month in accordance with the
wiring instructions below:
WIRE TO: Wachovia Bank NA
Avondale, PA
ABA: 000000000
FOR CREDIT TO: Vanguard Fee Collection Account
ACCOUNT NUMBER: 2000032593703
FOR FURTHER CREDIT TO: Master Account # [ ]
NOTE: THE ABOVE WIRING INSTRUCTIONS SHOULD BE USED ONLY FOR THE REMITTANCE OF
REDEMPTION AND PURCHASE FEES ON TRANSACTIONS IN VANGUARD FUNDS, AND NOT FOR ANY
OTHER PURPOSE.
8. On the same Business Day as each wire transfer of Redemption Fees, the
Intermediary shall deliver via facsimile to (000) 000-0000 a spreadsheet in the
form of the template attached to this Exhibit A indicating the allocation among
the Vanguard Funds and the Separate Accounts' or the Intermediary's accounts of
the fees remitted, which shall include the following information:
- Vanguard Fund number
- Master/client identification number
- CUSIP number
- Vanguard account number
- Dollar amount of the Redemption Fees remitted for each Vanguard Fund
account
Each such facsimile transmission shall include the name and telephone number of
an Intermediary contact for purposes of any questions regarding the Redemption
Fees remitted.
9. The Intermediary agrees to furnish Vanguard with such information as Vanguard
may reasonably request from time to time in order for Vanguard to verify the
Intermediary's compliance with the terms of these procedures, including, without
limitation, periodic certifications confirming such compliance. The Intermediary
shall maintain records sufficient to identify the date and time of receipt of
all Purchase and Redemption transactions resulting in Redemption Fees and shall
make such records available upon request for examination by Vanguard or its
designated representative or, at the written request of Vanguard, by appropriate
governmental authorities or self-regulatory organizations.
31
B. VANGUARD FUNDS THAT CHARGE REDEMPTION FEES*
REDEMPTION FEE HOLDING PERIOD
(APPLIES TO ALL LISTED (APPLIES TO ALL LISTED
FUND NAME FUND NUMBER SHARE CLASSES) SHARE CLASSES)
---------------------------------------------------------------------------------------------------------------------------------
Vanguard Capital Opportunity Fund 0111 (Investor Shares) 1% Less than 1 year
5111 (Admiral Shares)
Vanguard Consumer Discretionary Index Fund 5483 (Admiral Shares) 2% Less than 1 year
Vanguard Consumer Staples Index Fund 5484 (Admiral Shares) 2% Less than 1 year
Vanguard Convertible Securities Fund 0082 (Investor Shares) 1% Less than 1 year
Vanguard Developed Markets Index Fund 0227 (Investor Shares) 2% Less than 2 months
Vanguard Emerging Markets Stock Index Fund 0533 (Investor Shares) 0.25% All redemptions
(see Exhibit B for purchase fee information) 5533 (Admiral Shares)
1354 (Signal Shares)
0239 (Institutional Shares)
Vanguard Energy Fund 0051 (Investor Shares) 1% Less than 1 year
0551 (Admiral Shares)
Vanguard Energy Index Fund 5480 (Admiral Shares) 2% Less than 1 year
Vanguard European Stock Index Fund 0079 (Investor Shares) 2% Less than 2 months
0579 (Admiral Shares)
1352 (Signal Shares)
0235 (Institutional Shares)
Vanguard Financials Index Fund 5486 (Admiral Shares) 2% Less than 1 year
Vanguard FTSE All-World ex-US Index Fund 0770 (Investor Shares) 2% Less than 2 months
0881 (Institutional Shares)
Vanguard Health Care Fund 0052 (Investor Shares) 1% Less than 1 year
0552 (Admiral Shares)
Vanguard Health Care Index Fund 5485 (Admiral Shares) 2% Less than 1 year
Vanguard High-Yield Corporate Fund 0029 (Investor Shares) 1% Less than 1 year
0529 (Admiral Shares)
Vanguard Industrials Index Fund 5482 (Admiral Shares) 2% Less than 1 year
Vanguard Information Technology Index Fund 5487 (Admiral Shares) 2% Less than 1 year
Vanguard Institutional Developed Markets Index 0234 (Institutional Shares) 2% Less than 2 months
Fund
Vanguard International ExplorerTM Fund 0126 (Investor Shares) 2% Less than 2 months
Vanguard International Growth Fund 0081 (Investor Shares) 2% Less than 2 months
0581 (Admiral Shares)
Vanguard International Value Fund 0046 (Investor Shares) 2% Less than 2 months
Vanguard Market Neutral Fund 0634 (Investor Shares) 1% Less than 1 year
0734 (Institutional Shares)
Vanguard Materials Index Fund 5481 (Admiral Shares) 2% Less than 1 year
Vanguard Pacific Stock Index Fund 0072 (Investor Shares) 2% Less than 2 months
0572 (Admiral Shares)
1353 (Signal Shares)
0237 (Institutional Shares)
Vanguard Precious Metals & Mining Fund 0053 (Investor Shares) 1% Less than 1 year
Vanguard PRIMECAP Fund 0059 (Investor Shares) 1% Less than 1 year
0559 (Admiral Shares)
Vanguard PRIMECAP Core Fund 1220 (Investor Shares) 1% Less than 1 year
Vanguard REIT Index Fund 0123 (Investor Shares) 1% Less than 1 year
5123 (Admiral Shares)
1355 (Signal Shares)
3123 (Institutional Shares)
Vanguard Selected Value Fund 0934 (Investor Shares) 1% Less than 1 year
Vanguard Tax-Managed Balanced Fund 0103 (Investor Shares) 1% Less than 5 years
Vanguard Tax-Managed Capital Appreciation Fund 0102 (Investor Shares) 1% Less than 5 years
5102 (Admiral Shares)
0135 (Institutional Shares)
Vanguard Tax-Managed Growth and Income Fund 0101 (Investor Shares) 1% Less than 5 years
5101 (Admiral Shares)
0l36 (Institutional Shares)
32
REDEMPTION FEE HOLDING PERIOD
(APPLIES TO ALL LISTED (APPLIES TO ALL LISTED
FUND NAME FUND NUMBER SHARE CLASSES) SHARE CLASSES)
---------------------------------------------------------------------------------------------------------------------------------
Vanguard Tax-Managed International Fund 0127 (Investor Shares) 1% Less than 5 years
0137 (Institutional Shares)
Vanguard Tax-Managed Small-Cap Fund 0116 (Investor Shares) 1% Less than 5 years
0118 (Institutional Shares)
Vanguard Telecommunication Services Index Fund 5488 (Admiral Shares) 2% Less than 1 year
Vanguard Total International Stock Index Fund 0113 (Investor Shares) 2% Less than 2 months
Vanguard Total World Stock Index Fund 0628 (Investor Shares) 2% Less than 2 months
0826 (Institutional Shares)
Vanguard Utilities Index Fund 5489 (Admiral Shares) 2% Less than 1 year
------------
* The availability of funds may vary because of fund openings and closings or
changes in minimum initial investments.
33
REDEMPTION FEES
Intermediary Name: Contact Name:
Intermediary Address: Phone Number:
E-mail address:
TIN
CUSIP REDEMPTION
FUND NUMBER MASTER OR CLIENT ID NUMBER ACCOUNT NUMBER FEE AMOUNT
-------------------------------------------------------------------------------------------------------------
Total 0.00
34
EXHIBIT B
PURCHASE FEE PROCEDURES
1. Beginning on the date on which the Intermediary offers any shares of a
Vanguard Fund that imposes a purchase fee, the intermediary will assess a
purchase fee on shares of the Vanguard Funds identified below purchased by a
Separate Account (the "Purchase Fee"). For purposes of tracking and assessing
the Purchase Fee, all Separate Account acquisitions of shares as a result of (a)
a purchase or an exchange into the sub-account investing in the Vanguard Fund,
(b) a Plan participant-initiated asset transfer into the sub-account investing
in the Vanguard Fund, or (c) a Plan participant-initiated rollover into the
sub-account investing in the Vanguard Fund shall be considered "purchases" (a
"Purchase").
2. The following transactions will not be considered Purchases for purposes of
these Purchase Fee Procedures:
(a) Purchases of shares by reinvestment of dividends or capital gains
distributions;
(b) Transfers or re-registrations within the Vanguard Fund; and
(c) Conversions from one share class to another in the Vanguard Fund.
3. The Purchase Fee shall be withheld from the settlement of each Purchase of
Vanguard Fund shares, and shall be remitted to Vanguard monthly, or more
frequently as the parties shall agree, as follows. Purchase Fees due as a result
of transactions processed during each calendar month shall be accumulated and
remitted via Federal Funds wire received by Vanguard no later than 4:00 p.m.
Eastern time on the fifth Business Day of the following calendar month in
accordance with the wiring instructions below:
WIRE TO: Wachovia Bank NA
Avondale, PA
ABA: 000000000
FOR CREDIT TO: Vanguard Fee Collection Account
ACCOUNT NUMBER: 2000032593703
FOR FURTHER CREDIT TO: Master Account # [ ]
NOTE: THE ABOVE WIRING INSTRUCTIONS SHOULD BE USED ONLY FOR THE REMITTANCE OF
REDEMPTION AND PURCHASE FEES ON TRANSACTIONS IN VANGUARD FUNDS, AND NOT FOR ANY
OTHER PURPOSE.
4. On the same Business Day as each wire transfer of Purchase Fees, the
Intermediary shall deliver via facsimile to (000) 000-0000 a spreadsheet in the
form of the template attached to this Exhibit B indicating the allocation among
the Intermediary's accounts of the Purchase Fees remitted, which shall include
the following information:
- Fund number
- Master/client identification number
- CUSIP
- Vanguard account number
- Dollar amount of the Purchase Fees remitted
Each such facsimile transmission shall include the name and telephone number of
an Intermediary contact for purposes of any questions regarding the Purchase
Fees remitted.
5. The Intermediary agrees to furnish Vanguard with such information as
Vanguard may reasonably request from time to time in order for Vanguard to
verify the Intermediary's compliance with the terms of these procedures,
including, without limitation, periodic certifications confirming such
compliance. The Intermediary shall maintain records sufficient to identify the
date and time of receipt of all Purchases resulting in Purchase Fees and shall
35
make such records available upon request for examination by Vanguard or its
designated representative or, at the written request of Vanguard, by appropriate
governmental authorities or self-regulatory organizations.
VANGUARD FUNDS THAT CHARGE PURCHASE FEES*
PURCHASE FEE (APPLIES TO ALL
FUND NAME FUND NUMBER LISTED SHARE CLASSES)
----------------------------------------------------------------------------------------------------------------
Vanguard Emerging Markets Stock Index Fund 0533 (Investor Shares) 0.25%
5533 (Admiral Shares)
1354 (Signal Shares)
0239 (Institutional Shares)
Vanguard Total World Stock Index Fund 0628 (Investor Shares) 0.25%
0826 (Institutional Shares)
------------
* The availability of funds may vary because of fund openings and closings or
changes in minimum initial investments.
36
PURCHASE FEES
Intermediary Name: Contact Name:
Intermediary Address: Phone Number:
E-mail address:
TIN
CUSIP PURCHASE
FUND NUMBER MASTER OR CLIENT ID NUMBER ACCOUNT NUMBER FEE AMOUNT
-------------------------------------------------------------------------------------------------------------
Total 0.00
37
EXHIBIT C
CURRENT FREQUENT TRADING POLICY
ATTACHED BELOW IS THE INTERMEDIARY'S CURRENT FREQUENT TRADING POLICY. THIS
POLICY IS PROVIDED TO CONTRACT OWNERS AND/OR PLAN PARTICIPANTS OF THE PLAN.
REFERENCES TO "YOU" ARE INTENDED TO ADDRESS THE CONTRACT OWNER OR PLAN
PARTICIPANT IN THE PLAN. ANY REFERENCES TO "HARTFORD," "WE," "OUR" OR US" SHALL
BE DEEMED TO BE REFERENCES TO THE INTERMEDIARY.
INTRODUCTION
OVERVIEW -- You may make transfers between the Sub-Accounts offered in this
contract according to our policies and procedures as amended from time to time.
Hartford contracts are not designed to serve as vehicles for frequent trading in
response to short-term fluctuations in the market. Frequent trading can disrupt
management of underlying Funds and may raise transactional costs This in turn
can have an adverse effect on Sub-Account performance and ultimately your
account's performance.
We employ a "20 Transfer rule" to help curb frequent Sub-Account transfers.
Under this policy, you are allowed to submit a total of 20 Sub-Account transfer
requests each Calendar Year for their Participant Account. Once these 20
Sub-Account transfers have been requested, transfer requests by telephone. Voice
Response Unit, via the Internet or sent by same day mail or courier service will
not be accepted. You may only submit any additional Sub-Account transfer
requests only in writing by U.S. Mail or overnight delivery service.
We may make changes to this policy at any time.
In addition to the Hartford policy, the underlying Funds or the plan sponsor may
implement their own policies designed to restrict excessive trading.
SUB-ACCOUNT TRANSFER POLICY
CAN YOU TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER?
During those phases of your Contract when transfers are permissible, you may
make transfers between Sub-Accounts according to the following policies and
procedures, as they may be amended from time to time.
WHAT IS A SUB-ACCOUNT TRANSFER?
A Sub-Account transfer is a transaction requested by you that involves
reallocating part or all of your Participant Account value among the Funds
available in your Contract. Your transfer request will be processed as of the
end of the Valuation Day that it is received in good order. Otherwise, your
request will be processed on the following Valuation Day. We will send you a
confirmation when we process your transfer. You are responsible for verifying
transfer confirmations and promptly advising us of any errors within 30 days of
receiving the confirmation.
WHAT HAPPENS WHEN YOU REQUEST A SUB-ACCOUNT TRANSFER?
Many Participants request Sub-Account transfers. Some request transfers into
(purchases) a particular Sub-Account, and others request transfers out of
(redemptions) a particular Sub-Account. In addition, some Participants allocate
Contributions to Sub-Accounts, and others request Surrenders. We combine all the
daily
38
requests to transfer out of a Sub-Account along with all Surrenders from that
Sub-Account and determine how many shares of that Fund we would need to sell to
satisfy all Participants' "transfer-out" requests. At the same time, we also
combine all the daily requests to transfer into a particular Sub-Account or
Contributions allocated to that Sub-Account and determine how many shares of
that Fund we would need to buy to satisfy all Participants' "transfer-in"
requests.
In addition, many of the Funds that are available as investment options in our
variable annuity products are also available as investment options in variable
life insurance policies, retirement plans, funding agreements and other products
offered by us or our affiliates. Each day, investors and participants in these
other products engage in similar transfer transactions.
We take advantage of our size and available technology to combine sales of a
particular Fund for many of the variable annuities, variable life insurance
policies, retirement plans, funding agreements or other products offered by us
or our affiliate. We also combine many of the purchases of that particular Fund
for many of the products we offer. We then "net" these trades by offsetting
purchases against redemptions. Netting trades has no impact on the price you pay
for or receive upon the purchase or sale of an investment option. This means
that we sometimes reallocate shares of a Fund rather than buy new shares or sell
shares of the Fund.
For example, if we combine all transfer-out (redemption) requests and Surrenders
of a stock Fund Sub-Account with all other sales of that Fund from all our other
products, we may have to sell $1 million dollars of that Fund on any particular
day. However, if other Participants and the owner of other products offered by
us, want to transfer-in (purchase) an amount equal to $300,000 of that same
Fund, then we would send a sell order to the Fund for $700,000) (a $1 million
sell order minus the purchase order of $300,000) rather than making two or more
transactions.
WHAT RESTRICTIONS ARE THERE ON YOUR ABILITY TO MAKE A SUB-ACCOUNT TRANSFER?
FIRST, YOU MAY MAKE ONLY ONE SUB-ACCOUNT TRANSFER REQUEST EACH DAY. We limit
each Participants to one Sub-Account transfer request each Valuation Day. We
count all Sub-Account transfer activity that occurs on any one Valuation Day as
one "Sub-Account transfer", however, you cannot transfer the same Participant
Account value more than once a Valuation Day.
For Example:
- If the only transfer you make on a day is a transfer of $10,000 from
one Sub-Account into another Sub-Account, it would count as one
Sub-Account transfer.
- If, however, on a single day you transfer $10,000 out of one
Sub-Account into five other Sub-Accounts (dividing the $10,000 among
the five other Sub-Accounts however you chose), that day's transfer
activity would count as one Sub-Account transfer.
- Likewise, if on a single day you transferred $10,000 out of one
Sub-Account into ten other Sub-Accounts (dividing the $10,000 among
the ten other Sub-Accounts however you chose), that day's transfer
activity would count as one Sub-Account transfer.
- Conversely, if you have $10,000 in Participant Account value
distribution among 10 different Sub-Accounts and you request to
transfer the Participant Account value in all those Sub-Accounts into
one Sub-Account, that would also count as one Sub-Account transfer.
- However, you cannot transfer the same Participant Account value more
than once in one day. That means if you have $10,000 in a Money
Market Fund Sub-Account and you transfer all $10,000 into a
39
Stock Fund Sub-Account, on that same day you could not then transfer the
$10,000 out of the Stock Fund Sub-Account into another Sub-Account. 26
SECOND, YOU ARE ALLOWED TO SUBMIT A TOTAL OF 20 SUB-ACCOUNT TRANSFERS EACH
CALENDAR YEAR (the "Transfer Rule") by U.S. Mail, Voice Response Unit, Internet,
telephone, same day mail or courier service. Once you reach the maximum number
of Sub-Account transfers, you may only submit any additional Sub-Account
transfer requests (and any trade cancellation requests) in writing through U.S.
Mail or overnight delivery service. In other words, Voice Response Unit,
Internet or telephone transfer requests will not be honored. We may, but are not
obligated to, notify you when you are in jeopardy of approaching these limits.
For example, we will send you a letter after your 10th Sub-Account transfer to
remind you about the Transfer Rule. After your 20th transfer request, our
computer system will not allow you to do another Sub-Account transfer by
telephone, Voice Response Unit or via the Internet. You will then be instructed
to send your Sub-Account transfer request by U.S. Mail or overnight delivery
service.
We may aggregate a Contract owner's Contracts or a Participant's Participant
Accounts for the purposes of enforcing these restrictions.
The Transfer Rule does not apply to Sub-Account transfers that occur
automatically as part of a Company sponsored asset allocation or Dollar Cost
Averaging program Reallocations made based on a Fund merger or liquidation also
do not count toward this transfer limit. Restrictions may vary based on state
law.
The Contracts provide for a transfer Fee of $5 that applies to each transfer in
excess of 12 made in a Participant Contract Year. We do not currently charge the
$5 Transfer Fee. We make no assurances that the Transfer Rule is or will be
effective in detecting or preventing market timing.
THIRD, POLICIES HAVE BEEN DESIGNED TO RESTRICT EXCESSIVE SUB-ACCOUNT TRANSFERS.
You should not purchase or become a Participant under this Contract if you want
to make frequent Sub-Account transfers for any reason. In particular, don't
purchase or become a Participant under this Contract if you plan to engage in
"market timing." which includes frequent transfer activity into and out of the
same Fund, or frequent Sub-Account transfers in order to exploit any
inefficiencies in the pricing of a Fund. Even if you do not engage in market
timing, certain restrictions may be imposed on you, as discussed below:
FUND TRADING POLICIES
You are subject to Fund trading policies, if any, We are obligated to provide,
at the Fund's request, tax identification numbers and other shareholder
identifying information contained in our records to assist Funds in identifying
any pattern or frequency of Sub-Account transfers that may violate their trading
policy. In certain instances, we have agreed to serve as a Fund's agent to help
monitor compliance with that Fund's trading policy.
We are obligated to follow each Fund's instructions regarding enforcement of
their trading policy. Penalties for violating these policies may include, among
other things, temporarily or permanently limiting or banning Sub-Account
transfers into a Fund or other funds within that fund complex. These penalties
will affect a Contract Owner's or Participant's ability to purchase shares of
the underlying funds. We are not authorized to grant exceptions to a Fund's
trading policy. Please refer to each Fund's prospectus for more information.
Fund trading policies do not apply or may be limited. For instance:
- Certain types of financial intermediaries may not be required to
provide us with shareholder information.
40
- "Excepted funds" such money market funds and any Fund that
affirmatively permits short-term trading of its securities may opt
not to adopt this type of policy. This type of policy may not apply
to any financial intermediary that a Fund treats as a single
investor.
- A Fund can decide to exempt categories of Contract Owners whose
contracts are subject to inconsistent trading restrictions or none at
all.
- Non-shareholder initiated purchases or redemptions may not always be
monitored. These include Sub-Account transfers that are executed: (i)
automatically pursuant to a company sponsored contractual or
systematic program such as transfers of assets as a result of "dollar
cost averaging" programs, asset allocation programs, automatic
rebalancing programs, annuity payouts, loans, or systematic
withdrawal programs, (ii) as a result of the payment of a Death
Benefit; (iii) as a result of any deduction of charges or fees under
a Contract; or (iv) as a result of payments such as loan repayments,
scheduled contributions, scheduled withdrawals or surrenders,
retirement plan contributions.
POSSIBILITY OF UNDETECTED ABUSIVE TRADING OR MARKET TIMING. We may not be able
to detect or prevent all abusive trading activities. For instance,
- Since we net all the purchases and redemptions for a particular Fund
for this and many of our other products, transfers by any specific
market timer could be inadvertently overlooked.
- Certain forms of variable annuities and types of Funds may be
attractive to market timers. We can not provide assurances that we
will be capable of addressing possible abuses in a timely manner.
- Our policies apply only to individuals and entities that own or are
Participants under this Contract However. the Funds that make up the
Sub-Accounts of this Contract are available for use with many
different variable life insurance policies, variable annuity products
and funding agreements, and they are offered directly to certain
qualified retirement plans. Some of these products and plans may have
different or less restrictive transfer rules or no transfer
restrictions at all.
HOW ARE YOU AFFECTED BY FREQUENT SUB-ACCOUNT TRANSFERS?
We are not responsible for losses or lost investment opportunities associated
with the effectuation of these policies. Frequent Sub-Account transfers may
result in the dilution of the value of the outstanding securities issued by a
Fund as a result of increased transaction costs and lost investment
opportunities typically associated with maintaining greater cash positions. This
can adversely impact Fund performance and, as a result, the performance of your
Participant Account. This may also lower the Death Benefit paid to your
Beneficiary or lower Annuity Payouts for your payee as well as reduce value of
other optional benefits available under your Contract.
Separate Account investors could be prevented from purchasing Fund shares if we
reach an impasse on the execution of a Fund's trading instructions. In other
words, a Fund complex could refuse to allow new purchases of shares by all our
variable product investors if the Fund and we can not reach a mutually
acceptable agreement on how to treat an investor who, in a Fund's opinion, has
violated the Fund's trading policy.
In some cases, we do not have the tax identification number or other identifying
information requested by a Fund in our records. In those cases, we rely on the
Contract Owner to provide the information. If the Contract Owner does not
provide the information, we may be directed by the Fund to restrict the Contract
Owner from further purchases of Fund shares. In those cases, all Participants
under a plan funded by the Contract will also be precluded from further
purchases of Fund shares.
41
EXHIBIT D
SHARE CLASS ELIGIBILITY REQUIREMENTS
1. Share Classes. Accounts in Vanguard Funds maintained by the Intermediary may
qualify for Admiral Shares, Signal Shares, Institutional Shares and/or
Institutional Plus Shares, if and to the extent available from time to time, by
satisfying the applicable requirements set forth below. The Intermediary shall
be responsible for ensuring that only those accounts and/or Plans that satisfy
all applicable eligibility requirements below receive and continue to hold
Admiral Shares, Signal Shares, Institutional Shares or Institutional Plus
Shares, as appropriate, and/or such additional or substitute share classes as
the Vanguard Funds may offer from time to time. Vanguard and the Vanguard Funds
reserve the right to discontinue availability of any one or more share classes
at any time and for any reason without prior notice.
2. Admiral Shares. Except as set forth in Section 3 of this Exhibit with
respect to Admiral Shares of Signal Funds (as defined in such Section 3):
(a) For each Vanguard Fund (other than any Signal Fund), all purchases of
Admiral Shares and any conversions from Investor Shares to Admiral Shares must
be attributable to a Plan that has, or immediately after the transaction will
have, a minimum of $100,000 invested in the Vanguard Fund through a Separate
Account (an "Admiral Qualifying Plan");
(b) Assets beneficially owned by multiple Plans may not be aggregated to meet
the $100,000 minimum investment, except as approved by Vanguard in accordance
with criteria established by Vanguard;
(c) Assets beneficially owned by a Plan in the same Vanguard Fund through
multiple accounts may not be aggregated to meet the $100,000 minimum investment,
except as approved by Vanguard in accordance with criteria established by
Vanguard;
(d) Intermediaries seeking Admiral Shares for other account arrangements should
contact Vanguard for eligibility requirements;
(e) The Intermediary shall request a purchase of Admiral Shares, or a
conversion from Investor Shares to Admiral Shares, on behalf of an Admiral
Qualifying Plan via a Fund/SERV transmission; and
(f) In the event that a Plan holding Admiral Shares a Separate Account no
longer meets the $100,000 minimum or no longer satisfies Vanguard's criteria for
aggregation, the Intermediary will promptly direct Vanguard to reclassify the
appropriate amount of assets from Admiral Shares to Investor Shares, if
available, within the Intermediary's Vanguard accounts. In addition, Vanguard
may, without direction from the Intermediary, reclassify the appropriate amount
of assets from Admiral Shares to Investor Shares, if available, within the
Intermediary's Vanguard accounts, or exercise any other rights set forth in the
applicable Vanguard Fund's then-current prospectus and the Vanguard Funds'
then-effective Multiple Class Plan, with respect to a Plan holding Admiral
Shares through a Separate Account that no longer meets the $100,000 minimum or
no longer satisfies Vanguard's criteria for aggregation.
(g) Upon the request of Vanguard from time to time, the Intermediary will
submit to Vanguard a report listing (i) each Plan that beneficially owns Admiral
Shares through a Separate Account and (ii) the amount of each Vanguard Fund's
Admiral Shares held by the Intermediary for each such Plan (in dollars and
shares). This information will he provided separately for each Vanguard Fund and
each account maintained by the Intermediary. All such information will be kept
confidential by Vanguard, will not be disclosed to any unaffiliated third party
and will be used solely for purposes of monitoring compliance with the
eligibility requirements of the Admiral Shares program.
42
3. Signal Shares Eligibility Requirements. Effective June 1, 2007, the
Intermediary is not permitted to establish a new account in Admiral Shares of
any Vanguard Fund that offers Signal Shares (such funds are listed on Attachment
A to this Agreement) (each, a "Signal Fund"), purchase Admiral Shares of a
Signal Fund on behalf of a Plan, or convert Investor Shares of any Signal Fund
to Admiral Shares of such fund. The Intermediary shall be eligible to hold and
purchase Signal Shares of Signal Funds provided the Intermediary or the
appropriate Plan or Vanguard Institutional Client (as defined in Section 3(c)
below), as the case may be, satisfies the following requirements as and to the
extent applicable.
(a) Conversion from admiral Shares; Grace Period. All Signal Shares acquired by
the Intermediary on or prior to October 5, 2007 (the "Conversion Date") by
conversion from Signal Fund Admiral Shares (such shares, "Converted Shares")
shall be exempt from reclassification to Investor Shares, as described in
Section 3(f) below, permanently with respect to Converted Shares held by or on
behalf of Plans ("Grandfathered Plans").
(b) Plan Eligibility. For each Signal Fund, all purchases of Signal Shares and
any conversions from Investor Shares to Signal Shares must be attributable to a
Plan (other than a Grandfathered Plan) that has, or immediately after the
transaction will have, a minimum of $1,000,000 invested in the Signal Fund
through a Separate Account. Assets beneficially owned by multiple Plans may not
be aggregated to meet the $1,000,000 minimum investment, and assets beneficially
owned by a Plan in the same Signal Fund through multiple accounts may not be
aggregated to meet the $1,000,000 minimum investment, in each case except as
approved by Vanguard in accordance with criteria established by Vanguard.
Grandfathered Plans may purchase additional Signal Shares of, and may establish
new Signal Share accounts in, any Signal Funds held by or on behalf of such
Grandfathered Plans as of the Conversion Date. The requirements of this Section
3(b) apply to each Plan serviced by the Intermediary.
(c) Vanguard institutional Client Eligibility. With respect to
non-Grandfathered Plans that are Vanguard Institutional Clients, all purchases
of Signal Shares and any conversions from Investor Shares to Signal Shares must
be attributable to a Vanguard Institutional Client that has, or immediately
after the transaction will have, a minimum of $1,000,000 invested in the Signal
Fund through a Separate Account. Assets beneficially owned by multiple Vanguard
Institutional Clients may not be aggregated to meet the $1,000,000 minimum
investment, and assets beneficially owned by a Vanguard Institutional Client in
the same Signal Fund through multiple accounts may not be aggregated to meet the
$1,000,000 minimum investment, in each case except as approved by Vanguard in
accordance with criteria established by Vanguard. This requirement applies to
each Vanguard Institutional Client serviced by the Intermediary. For purposes of
this Section 3, "Vanguard Institutional Client" shall mean a Plan or Plan
sponsor that is the beneficial owner of Vanguard Fund shares and has a special
servicing arrangement with Vanguard, but for which Vanguard does not provide
full service plan recordkeeping or administrative services. Vanguard will be
responsible for identifying to the Intermediary those Vanguard Institutional
Clients known to Vanguard to be trading through a Separate Account.
(d) Acquiring Signal Shares by Purchase or Conversion from Investor Shares. The
Intermediary shall request a purchase of Signal Shares, or a conversion from
Investor Shares to Signal Shares, on behalf of an eligible Plan via a Fund/SERV
transmission.
(e) Vanguard Funds Not Offering Signal Shares. The Intermediary shall be
permitted to purchase and hold, on behalf of Plans, Admiral Shares of any
Vanguard Fund that does not and will not offer Signal Shares, subject to
applicable Admiral Shares eligibility requirements in effect from time to time.
(f) Reclassification to Investor Shares. Subject to the provisions of Section
3(a) above, in the event that a Plan (other than a Grandfathered Plan) holding
Signal Shares through a Separate Account no longer satisfies the applicable
Signal Shares eligibility requirements, the Intermediary will promptly direct
Vanguard to reclassify the appropriate amount of assets from Signal Shares to
Investor Shares within the Intermediary's Vanguard accounts. In addition,
Vanguard may, without direction from the Intermediary, reclassify the
appropriate amount of assets from Signal Shares to Investor Shares within the
Intermediary's Vanguard accounts, or exercise any other rights set forth in the
applicable Vanguard Fund's then-current prospectus and the Vanguard Funds'
then-effective Multiple Class Plan, with respect to a Plan (other than a
Grandfathered Plan) holding Signal Shares through a Separate Account that no
longer satisfies the applicable eligibility requirements.
43
(g) Intermediary Reporting. In order to enable Vanguard to (x) ensure the
Intermediary's compliance with these Signal Shares eligibility requirements, and
(y) identify those Plans that hold Signal Shares but are not eligible to do so,
the Intermediary agrees to furnish Vanguard with the following information, upon
Vanguard's written request with reasonable advance notice:
(i) A report identifying, as applicable (A) each Plan that owns Signal
Shares through a Separate Account and the Signal Fund accounts in
which such assets are maintained; and (B) the amount of each Signal
Fund's Signal Shares held by each Plan (in dollars and shares). This
information will be provided separately for each Signal Fund and
will reflect Signal Share account balances as of the most recent
month end.
(ii) A description of the Intermediary's policies and procedures for
implementation of the Signal Shares eligibility rules applicable to
Plans investing in Signal Shares through a Separate Account.
(iii) Such other or additional reporting or information as Vanguard may
specify in order to ensure compliance with applicable Signal Shares
eligibility requirements.
All such information will be kept confidential by Vanguard, will not be
disclosed to any unaffiliated third party and will be used solely for purposes
of monitoring compliance with the eligibility requirements of the Signal Shares
program.
4. INSTITUTIONAL SHARES ELIGIBILITY REQUIREMENTS.
(a) For each Vanguard Fund, all purchases of Institutional Shares and any
conversions from Investor Shares, Admiral Shares or Signal Shares to
Institutional Shares must be attributable to a Plan that has, or immediately
after the transaction will have, a minimum of $5,000,000*invested in the
Vanguard Fund through a Separate Account (an "Institutional Qualifying Plan");
(b) Assets beneficially owned by multiple Plans may not be aggregated to meet
the $5,000,000" minimum investment, except as approved by Vanguard in accordance
with criteria established by Vanguard;
(c) Assets beneficially owned by a Plan in the same Vanguard Fund through
multiple accounts may not be aggregated to meet the $5,000,000* minimum
investment, except as approved by Vanguard in accordance with criteria
established by Vanguard;
(d) Intermediaries seeking Institutional Shares for other account arrangements
should contact Vanguard for eligibility requirements;
(e) The Intermediary shall request a purchase of Institutional Shares, or a
conversion from any other class of shares to Institutional Shares, on behalf of
an Institutional Qualifying Plan by providing a written notification to Vanguard
identifying the Institutional Qualifying Plan and the value of shares held in
the relevant Vanguard Fund offering Institutional Shares; and
(f) In the event that a Plan holding Institutional Shares through a Separate
Account no longer meets the $5,000,000* minimum or no longer satisfies
Vanguard's criteria for aggregation, the Intermediary will promptly direct
Vanguard to reclassify the appropriate amount of assets from Institutional
Shares to Signal Shares. Admiral Shares or Investor Shares, as appropriate and
if available, within the Intermediary's Vanguard accounts. In addition, Vanguard
may, without direction from the Intermediary, reclassify the appropriate amount
of assets from institutional Shares to Signal Shares, Admiral Shares or Investor
Shares, is appropriate, within the Intermediary's Vanguard accounts, or exercise
any other rights set forth in the applicable Vanguard Fund's then-current
prospectus and the Vanguard Funds" then-effective Multiple Class Plan, with
respect to a Plan holding Institutional Shares through a separate Account that
no longer meets the $5,000,000* minimum or no longer satisfies Vanguard's
criteria for aggregation.
44
(g) Upon the request of Vanguard from time to time, the Intermediary will
submit to Vanguard a report listing (i) each Plan that beneficially owns
Institutional Shares through a Separate Account, and (ii) the amount of each
Vanguard Fund's Institutional Shares held by the Intermediary for each such Plan
(in dollars and shares).This information will be provided separately for each
Vanguard Fund and each account maintained by the Intermediary. All such
information will be kept confidential by Vanguard, will not be disclosed to any
unaffiliated third parry and will be used solely for purposes of monitoring
compliance with the eligibility requirements of the Institutional Shares
program.
------------
* Required minimum for Vanguard Intermediate-Term Bond Index Fund
Institutional Shares is $25,000,000; for Vanguard Long-Term Bond Index Fund
Institutional Shares is $25,000,000; for Vanguard Short-Term
Investment-Grade Fund Institutional Shares is $50,000,000; for Vanguard
Institutional Total Bond Market Index Fund Institutional Shares.
$100,000,000; and for Vanguard Institutional Total stock Market Index Fund
Institutional Shares, $100,000,000. The availability of funds may vary
because of fund openings and closings or changes in minimum investments.
5. INSTITUTIONAL PLUS SHARES ELIGIBILITY REQUIREMENTS.
(a) For each Vanguard Fund, all purchases of Institutional Plus Shares and any
conversions from any other class of shares to Institutional Plus Shares must be
attributable to a Plan that has, or immediately after the transaction will have,
the minimum amount specified in the relevant Vanguard Fund's Institutional Plus
Shares prospectus invested in the Vanguard Fund through a Separate Account (an
"Institutional Plus Qualifying Plan");
(b) Assets beneficially owned by multiple Plans may not be aggregated to meet
the required investment minimum, except as approved by Vanguard in accordance
with criteria established by Vanguard;
(c) Assets beneficially owned by a Plan in the same Vanguard Fund through
multiple accounts may not be aggregated to meet the required investment minimum,
except as approved by Vanguard in accordance with criteria established by
Vanguard;
(d) Intermediaries seeking Institutional Plus Shares for other account
arrangements should contact Vanguard for eligibility requirements;
(e) The Intermediary shall request a purchase of Institutional Plus Stares, or
a conversion from any other class of shares to Institutional Plus Shares, on
behalf of an Institutional Plus Qualifying Plan by providing a written
notification to Vanguard identifying the Institutional Plus Qualifying Plan and
the value of shares held in the relevant Vanguard Fund offering Institutional
Plus Shares; and
(f) In the event that a Plan holding Institutional Plus Shares through a
Separate Account no longer meets the required investment minimum or no longer
satisfies Vanguard's criteria for aggregation, the Intermediary will promptly
direct Vanguard to reclassify the appropriate amount of asset from Institutional
Plus Shares to Institutional Shares, Signal Shares, Admiral Shares or Investor
Shares, as appropriate and if available, within the Intermediary's Vanguard
accounts. In addition, Vanguard may, without direction from the Intermediary,
reclassify the appropriate amount of assets from Institutional Plus Shares to
Institutional Shares, Signal Shares, Admiral Shares or Investor Shares, as
appropriate, within the Intermediary's Vanguard accounts, or exercise any other
rights set forth in the applicable Vanguard Fund's then-current prospectus and
the Vanguard Funds' then-effective Multiple Class Plan, with respect to a Plan
holding Institutional Plus Shares through a Separate Account that no longer
meets the required investment minimum or no longer satisfies Vanguard's criteria
for aggregation.
(g) Upon the request of Vanguard from time to time, the Intermediary will
submit to Vanguard a report listing (i) each Plan that beneficially owns
Institutional Plus Shares through a Separate Account, and (ii) the amount of
each Vanguard Fund's Institutional Plus Shares held by the Intermediary for each
such Plan (in dollars and shares). This information will be provided separately
for each Vanguard Fund and each account maintained by the Intermediary. All such
information will be kept confidential by Vanguard, will not be disclosed to any
unaffiliated third party and will be used solely for purposes of monitoring
compliance with the eligibility requirements of the Institutional Plus Shares
program.
45
EXHIBIT E
FIRM INFORMATION FORM
IMPORTANT INFORMATION ABOUT OPENING A NEW ACCOUNT: Vanguard is required by
federal law to obtain from each person who opens an account certain personal
information -- including name, address, and date of birth among other
information -- that will be used to verify identity. If you do not provide us
with this information, we will not be able to open the account. If we are unable
to verify your identity, Vanguard reserves the right to close your account or
take other steps we deem reasonable.
(PLEASE PRINT, PREFERABLY IN BLACK INK)
1. NAME OF FIRM Please check the box, if applicable:
/ / Employee benefit plan established under ERISA
--------------------
2. FIRM INFORMATION
Citizenship: / / U.S. Citizen or
/ / Resident Alien or / / Nonresident Country of citizenship for
Alien nonresident alien
/ / Applied for.
----------------------------------------
Employer Identification Number, or Date of application:
Qualified Intermediary Employer
Identification Number (IF A
NON-U.S. ENTITY)
-----------------------------------------------------------------------------
Street Address or APO/FPO (A P.O. BOX OR RURAL ROUTE NUMBER IS NOT
ACCEPTABLE)
----------------------------------------------------------------
City State Zip Code
Daytime Telephone Evening Telephone Number
Number
3. TYPE OF ACCOUNT
IMPORTANT: PLEASE SEND US, ALONG WITH THIS FORM, A COPY OF THE DOCUMENTATION
REQUIRED FOR THE ACCOUNT REGISTRATION TYPE SPECIFIED BELOW, OR THERE MAY BE A
DELAY IN ESTABLISHING THE ACCOUNT OR ACCOUNT OPTIONS.
DOCUMENTS REQUIRED
/ / Corporation Articles of Incorporation or state-issued charter or
Certificate of Good Standing.
/ / Endowment Pages in trust document that show the name of the
endowment and a listing of all trustees and their
signatures.
/ / Foundation Articles of Incorporation.
/ / Partnership Partnership Agreement.
/ / Professional Association or Corporation; Limited Articles of Association, Certificate of Organization, or
Liability Corporation similar document.
/ / Sole Proprietorship Document filed to form the proprietorship.
/ / Unincorporated Enterprise Document evidencing the existence of the enterprise,
such as the charter or resolution.
/ / Other Document filed to form the organization (if a legal
entity), or organization bylaws or similar document (if
not a legal entity).
------------
(PLEASE SPECIFY TYPE)
46
CHECK ONE OF THE FOLLOWING IF IT DESCRIBES THE ORGANIZATION OPENING THE ACCOUNT:
/ / Broker/Dealer / / National Bank / / Government Agency or
Instrumentality
/ / Mutual Fund / / State-Regulated / / Publicly Traded on the Nasdaq
Bank (Except Small-Cap Issues), NYSE, or
AMEX
-----------------------
(ENTER TICKER SYMBOL.)
4. NAMES AND SIGNATURES OF AUTHORIZED SIGNERS
The undersigned hereby certify that all information provided on this Firm
Information Form is true, correct, and complete.
--------------------------------
Name
------------------------------------------------------------------------
Signature/Title Date
--------------------------------
Name
------------------------------------------------------------------------
Signature/Title Date
47
[LOGO]
VANGUARD
December 19, 2011 X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000-0000
xxx.xxxxxxxx.xxx
RE: Attachment A - Vanguard Large Transaction Table
Exhibit B -- Purchase Fee Table
Dear Trading Partner:
Thank you for investing in Vanguard(R) funds. Attached is an updated version of
our Large Transaction Table. This table provides a complete list of
Fund/SERV-eligible Vanguard Funds, including their dividend schedules and fee
information. Please replace your existing table with this updated version and
forward it to your respective trading areas. All revised information has been
shaded in xxxx.
The Exhibit B - Purchase Fee Table of your Vanguard contract has been updated
with the most recent changes to the Emerging Markets Stock Index Funds and the
Total World Stock Index Funds. Please file this updated version with your
contract.
Thank you in advance for adhering to these new requirements. If you have any
questions of would like to update your contact information, please contact us at
xxxxxxxxx@xxxxxxxx.xxx or 0-000-000-0000.
Sincerely,
/s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
Senior Manager
Vanguard Financial Advisor Services
Enclosure -- Attachment A - Vanguard Large Transaction Table
Exhibit B - Purchase Fee Table
VANGUARD FUNDS THAT CHARGE PURCHASE FEES*
PURCHASE FEE
(APPLIES TO ALL
LISTED SHARE
FUND NAME* FUND NUMBER CLASSES)
----------------------------------------------------------------------------------------------------------------
Vanguard Emerging Markets Stock Index Fund 0533 (Investor Shares) 0.25%
5533 (Admiral Shares)
1354 (Signal Shares)
1239 (Institutional Shares)
1865 (Instit Plus Shares)
Vanguard FTSE All-World ex-US Small-Cap Index Fund 1684 (Investor Shares) 0.75%
0884 (Institutional Shares)
Vanguard Global ex-U.S. Real Estate Index Fund 738 (Investor Shares) 0.25%
1758 (Signal Shares)
1858 (Institutional Shares)
Vanguard Short-Term Corporate Bond Index Fund 1945 (Signal Shares) 0.25%
1645 (Institutional Shares)
Vanguard Intermediate-Term Corporate Bond Index Fund 1946 (Signal Shares) 0.50%
1646 (Institutional Shares)
Vanguard Long-Term Corporate Bond Index Fund 1947 (Signal Shares) 1.00%
1647 (Institutional Shares)
Vanguard Extended Duration Treasury Index Fund 1275 (Institutional Shares) 0.25%
1276 (Instit Plus Shares)
------------
* The availability of funds may vary because of fund openings and closings or
changes in minimum initial investments.
