[Form Of]
CUSTODIAL UNDERTAKING IN CONNECTION
WITH MASTER REPURCHASE AGREEMENT
*********************
BY AND AMONG
The Vanguard Group, Inc., not on its own behalf but on behalf of the
registered investment companies for which The Vanguard Group, Inc. provides
investment advisory or administrative services as listed in paragraph 1 of
Schedule V to this Agreement
(Buyer)
AND
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(Seller)
AND
JPMorgan Chase Bank
(Custodian)
THIS CUSTODIAL UNDERTAKING (together with the Exhibits and Schedules
attached hereto, and made a part hereof, this "Custodial Undertaking") is made
and entered into as of the date set forth below by and among Buyer, Seller, and
Custodian.
RECITALS
WHEREAS, Buyer and Seller have entered into a revised PSA Master
Repurchase Agreement dated as of ________________, (as it may be amended by the
parties thereto, the "Master Repurchase Agreement"), and may from time to time
enter into Transactions with respect to Eligible Securities (as hereinafter
defined); and
WHEREAS, Custodian has agreed to act as agent for Buyer and Seller in
order to effect Transactions on their behalf, all as more particularly set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS
Whenever used in this Custodial Undertaking, the following words shall
have the meanings set forth below.
A. "Authorized Person" shall mean any person, whether or not any such
person is an officer or employee of Buyer or Seller, as the case may be, duly
authorized to give Oral Instructions and Written Instructions on behalf of Buyer
or Seller, such persons and their specimen signatures to be designated in
Schedule II attached hereto, as such Schedule II may be amended from time to
time.
B. "Book-Entry Securities" shall mean Book-entry Securities as defined
in 31 C.F.R.Part 357.2 and any other securities registered in the form of an
entry on the records of the Book-Entry System.
C. "Book-Entry System" shall mean the Treasury/Reserve Automated Debt
Entry System maintained at The Federal Reserve Bank of New York ("FRBNY").
D. "Buyer's Account" shall mean the custodial account maintained by
Custodian on behalf of Buyer for the deposit of Eligible Securities with respect
to Transactions and shall also include, without limitation, any account for the
deposit of cash in connection therewith. For the purposes of this Custodial
Undertaking, Buyer's Account shall be deemed to be a "securities account" within
the meaning of the UCC, and Eligible Securities deposited in connection
therewith shall be deemed to be a "financial asset" within the meaning of the
UCC.
E. "Clearing Corporation" shall mean the Depository Trust Company,
Participants Trust Company and any other clearing corporation within the meaning
of Section 8-102 of the UCC or otherwise authorized to act as a securities
depository or clearing agency.
F. "Clearing Corporation Securities" shall mean securities which are
registered in the name of Custodian or its nominee in the form of an entry on
the records of a Clearing Corporation.
G. "Eligible Securities" shall mean those types of Securities which
Buyer, Seller and Custodian have agreed shall be eligible for Transactions by
inclusion on a Schedule of Eligible Securities substantially in the form of
Schedule I hereto, as such Schedule of Eligible Securities may be amended from
time to time, and cash.
H. "Income" shall mean with respect to any Security at any time, any
principal thereof and all interest, dividends or other distributions thereon.
I. "Market Value of Securities" shall mean, with respect to any
Security as of any date, the sum of (i) the market value of such Security based
on the most recently available bid price for the particular Security as made
available to Custodian by pricing information services which Custodian uses
generally for pricing such Securities, and (ii) accrued but unpaid Income, if
any, on the particular Security (to the extent not included therein). In the
case of cash and certificates of deposit, the face amount shall be deemed the
Market Value. If no price is available, Custodian shall be authorized to price
any Security by contacting any dealer designated as a "primary dealer" by the
Federal Reserve Bank of New York and relying upon any price quoted by such
"primary dealer" as if it were quoted by a recognized pricing service, or
Custodian may price such Security in accordance with the methodology utilized by
Custodian for such purpose in the ordinary course of its business.
J. "Notice of Default" shall mean a written notice delivered by Buyer
to Custodian and Seller, or by Seller to Custodian and Buyer, informing
Custodian and the defaulting party of an Event of Default pursuant to Paragraph
11 of the Master Repurchase Agreement and setting forth the specific Event of
Default thereunder.
K. "Oral Instructions" shall mean verbal instructions received by
Custodian from an Authorized Person or from a person reasonably believed by
Custodian to be an Authorized Person.
L. "Physical Securities" shall mean securities and money market
instruments issued in definitive form which are not Book-Entry Securities or
Clearing Corporation Securities.
M. "Price Differential" shall mean, with respect to any Transaction as
of any date, the aggregate amount obtained by daily application of the Pricing
Rate for such Transaction to the Purchase Price for such Transaction on a
360-day-per-year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and ending
on (but excluding) the date of determination (reduced by any amount of such
Price Differential previously paid by Seller to Buyer with respect to such
Transaction.)
N. "Pricing Rate" shall mean the per annum percentage rate for
determination of the Price Differential.
O. "Purchase Date" shall mean the date on which Purchased Securities
are to be transferred by Seller to Buyer.
P. "Purchase Price" shall mean the price at which Purchased Securities
are transferred by Seller to Buyer on the Purchase Date.
Q. "Purchased Securities" shall mean the Securities transferred by
Seller to Buyer in a Transaction, and any Securities substituted therefor .
R. "Repurchase Date" shall mean the date on which Seller is to
repurchase the Purchased Securities from Buyer in accordance with the terms of
the Master Repurchase Agreement.
S. "Repurchase Price" shall mean the price at which Purchased
Securities are to be transferred from Buyer to Seller upon termination of a
Transaction, which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the Price
Differential as of the date of such determination. Custodian shaall have no
obligation to independently calculate the Repurchase Price, but shall be
entitled to rely on the Repurchase Price contained in instructions provided by
Seller to Custodian on the Repurchase Date and on each Business Day that a
Repurchase Transaction remains outstanding.
T. "Securities" shall mean Book-Entry Securities, Clearing Corporation
Securities, Physical Securities, and cash.
U. "Seller's Account" shall mean Seller's clearing account on
Custodian's Broker Dealer Automated System ("BDAS"), any other account in which
Securities are held by Custodian on behalf of Seller pursuant to the terms of
this Custodial Undertaking, and any account for the deposit of cash maintained
in connection therewith.
V. "Transactions" shall mean transactions in which Seller agrees to
transfer to Buyer Purchased Securities against the transfer of funds by Buyer,
with a simultaneous agreement by Buyer to transfer to Seller such Purchased
Securities at a date certain or on demand, against the transfer of funds by
Seller.
W. "UCC" shall mean the Uniform Commercial Code of the State of New
York (as the same may be deemed to be in effect pursuant to applicable law and
federal regulation).
X. "Written Instructions" shall mean written communications received by
Custodian from an Authorized Person by telex, through BDAS or any other
electronic system whereby the receiver of such communications is able to verify
by codes, passwords or otherwise with a reasonable degree of certainty the
identity of the sender of such communications.
Y. "Margin Percentage" shall mean such percentage as is specified for
each type of Eligible Security listed on Schedule 1 hereto. Unless otherwise
specified on Schedule 1 hereto, the Margin Percentage for cash shall be 100%.
Z. "Margin Value" shall mean, with respect to any Transaction as of any
date, the amount obtained by dividing the Market Value of each Security by the
applicable Margin Percentage and aggregating such amounts. The Margin Value of
Securities shall equal or exceed the Repurchase Price at the times calculated by
Custodian pursuant to this Agreement.
All references to time herein shall mean the time in effect on that day
in New York, New York. Except as may otherwise apply for Income payable on
particular Securities or as otherwise may be agreed to in writing by the parties
hereto, all provisions in the Custodial Undertaking for the transfer, payment or
receipt of funds or cash shall mean transfer of, payment in, or receipt of,
United States dollars in immediately available funds.
2. APPOINTMENT OF CUSTODIAN; ACCOUNTS
A. Buyer and Seller hereby appoint Custodian as custodian of all
Securities and cash at any time delivered to Custodian in connection with
Transactions subject to this Custodial Undertaking and as their agent to effect
Transactions. Custodian hereby accepts appointment as custodian and agent.
B. Buyer and Seller each authorizes and instructs Custodian to utilize
the Book-Entry System, Clearing Corporations and the receipt and delivery of
physical certificates or any combination thereof in connection with its
performance hereunder. Book-Entry Securities and Clearing Corporation Securities
credited to Buyer's Account and Seller's Account will be represented in accounts
at the Book-Entry System and the appropriate Clearing Corporation in the name of
Custodian or its nominee which include only assets held by Custodian for its
customers and shall not include any assets held by Custodian in its individual
capacity. Transactions with respect to Book-Entry Securities and Clearing
Corporation Securities will be effected in accordance with, and subject to, the
rules and regulations of the Book-Entry System and each Clearing Corporation,
respectively.
3. REPRESENTATIONS AND WARRANTIES
A. Buyer, Seller and Custodian. Buyer, Seller and Custodian each
represents and warrants, which representations and warranties shall be deemed to
be repeated on each Purchase Date and each Repurchase Date, that:
(i) It is duly organized and existing under the laws of the
jurisdiction of its organization with full power and authority to execute and
deliver this Custodial Undertaking and to perform all of the duties and
obligations to be performed by it hereunder;
(ii) This Custodial Undertaking is, and each Transaction (with
respect to Buyer and Seller) will be, legally and validly entered into, does
not, and will not, violate any ordinance, charter, by-law, rule or statute
applicable to it, and is enforceable in accordance with its terms, except as may
be limited by bankruptcy, insolvency or similar laws, or by equitable principles
relating to or limiting creditors' rights generally; and
(iii) The person executing this Custodial Undertaking on
its behalf has been duly and properly authorized to do so.
B. Further Representations of Custodian. Custodian further represents
and warrants, which representations and warranties shall be deemed to be
repeated on each Purchase Date and each Repurchase Date, that:
(i) It is a New York trust company with its principal
office at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000;
(ii) It will maintain Buyer's Account as a custody account and
shall administer Buyer's Account in the same manner it administers similar
accounts established for the same purpose; and
(iii) It maintains a book-entry securities account with FRBNY
and each Clearing Corporation in which it holds Securities hereunder.
4. DEPOSIT OF CASH AND ELIGIBLE SECURITIES
A. Seller's Instructions. On each Business Day that Seller and Buyer
agree to enter into a Transaction subject to this Custodial Undertaking, Seller
shall deliver to Custodian, prior to Custodian's close of business, Oral or
Written Instructions containing the following information:
(i) the Purchase Date and Purchase Price;
(ii) the Repurchase Date and Repurchase Price ; and
(iii) name of Buyer.
B. Seller's Tender of Securities. By the close of business on the
Purchase Date, Seller shall transfer, or cause to be transferred, to Seller's
Account sufficient Eligible Securities to complete Transactions on such Purchase
Date. In connection therewith, Seller shall either deliver to Custodian Oral or
Written Instructions identifying the Eligible Securities to be sold by Seller to
Buyer, including a description setting forth the face amount of each Eligible
Securities and, where applicable, the CUSIP number for each such Eligible
Security or instruct Custodian to identify Eligible Securities in Seller's
Account to be transferred to Buyer's Account.
C. Buyer's Purchase Price. Prior to Custodian's close of business on
the Purchase Date, Buyer shall transfer, or cause to be transferred, to Buyer's
Account sufficient cash such that the total cash balance in Buyer's Account
after such transfer equals or exceeds the Purchase Price contained in Seller's
Oral or Written Instructions. In connection therewith, Buyer shall either
deliver to Custodian Oral or Written Instructions setting forth the amount of
cash to be transferred to Seller's Account.
5. EFFECTING TRANSACTIONS
A. Purchase Date. On the Purchase Date for any Transaction subject to
this Custodial Undertaking, Custodian shall transfer to Seller's Account cash
from Buyer's Account in an amount equal to the Purchase Price and transfer from
Seller's Account to Buyer's Account Eligible Securities in accordance with
Seller's Oral or Written Instructions with respect to such Transaction, subject
to the following provisions:
(i) Determination of Eligible Securities; Negotiability.
Custodian shall determine that Securities to be transferred to Buyer's Account
are Eligible Securities and that Physical Securities are in negotiable form. Any
Securities which are not Eligible Securities and any Physical Securities which
are not in negotiable form shall not be included in the calculations set forth
below and shall not be transferred to Buyer's Account.
(ii) Determination of Market Value. Custodian shall determine
the Market Value of Eligible Securities to be transferred to Buyer's Account.
(iii) Payment of Purchase Price. Provided the Margin Value of
Eligible Securities to be transferred to Buyer's Account equals or exceeds the
Repurchase Price with respect to such Transaction, Custodian shall transfer such
Eligible Securities from Seller's Account to Buyer's Account and shall disburse
from Buyer's Account to Seller's Account cash in an amount equal to the Purchase
Price.
(iv) Maintenance of Buyer's Account.
(a) Physical Securities. Custodian shall take
possession of each Eligible Security which is a
Physical Security at a secure facility at one of its offices in New York City
and, during the term of a particular Transaction, shall identify such Physical
Securities on its books and records as belonging to Buyer.
(b) Book-Entry Securities. Each Eligible Security
which is either (i) a Book-Entry Security, or
(ii) a part of a fungible bulk of Book-Entry Securities shall be continuously
maintained by Custodian in the Book-Entry System. During the term of a
particular Transaction, Custodian shall identify such Book-Entry Securities on
its books and records as belonging to Buyer.
(c) Clearing Corporation Securities. Each Eligible
Security which is either (i) a Clearing
Corporation Security, or (ii) part of a fungible bulk of Clearing Corporation
Securities shall be continuously maintained by Custodian in an account with the
appropriate Clearing Corporation. During the term of a particular Transaction,
Custodian shall continuously identify such Clearing Corporation Securities on
its books and records as belonging to Buyer.
(d) Notwithstanding anything contained in Paragraphs
5.A.(iv)(b) and 5.A.(iv)(c), above, Custodian may
maintain both Book-Entry Securities and Clearing Corporation Securities in an
account maintained by Custodian at the Government Securities Clearing
Corporation.
(v) Intent of Buyer and Seller. Buyer and Seller agree that it
is intended that Custodian act as a "securities intermediary" as such term is
defined in the UCC with respect to Transactions hereunder. In addition, the
parties intend that all Securities in Buyer's Account, other than cash, shall be
treated as "financial assets" as such term is defined in the UCC.
B. Trust Receipts. Custodian may not accept trust receipts as
collateral.
C. Custodian's Inability to Complete a Transaction. If Custodian is
unable to complete a Transaction because Seller has failed to provide complete
Oral or Written Instructions as required by Paragraphs 4A and 4B or either Buyer
or Seller has failed to arrange for the transfer of sufficient cash or Eligible
Securities to Buyer's Account or Seller's Account, respectively, Custodian shall
promptly notify Seller and Buyer and await the receipt of such Oral or Written
Instructions, cash or Eligible Securities. If Custodian has not received Oral or
Written Instructions from Seller by 4:30 p.m. Eastern Time, sufficient cash from
Buyer by the close of the FRBNY money wire or sufficient Eligible Securities by
the close of GSCS or the appropriate Clearing Corporation or such time as
Custodian may designate with respect to particular types of Physical Securities,
Buyer and Seller irrevocably agree and instruct Custodian to effect the
Transaction as follows: (i) if the cash balance in Buyer's Account shall be less
than the Purchase Price set forth in Seller's Instructions, the cash balance in
Buyer's Account shall be deemed to be the Purchase Price, the remaining terms of
the Transaction shall be determined in accordance with Paragraph 5A, and Seller
shall provide Custodian with further Oral or Written Instructions with respect
to a recalculated Repurchase Price for such Transaction; (ii) if the cash in
Buyer's Account exceeds the Repurchase Price relating to the Eligible Securities
in Seller's Account, Custodian shall credit to Seller's Account cash in an
amount equal to the Repurchase Price relating to the Eligible Securities, and
the difference between the amount credited to Seller's Account and the Purchase
Price shall be retained by Buyer and held by Custodian in Buyer's Account. In
any event, Buyer and Seller shall remain obligated to each other pursuant to the
original terms of each Transaction.
D. Simultaneous Transaction. Buyer and Seller agree that in effecting
Transactions, transfers between Buyer's Account and Seller's Account are
intended to be, and shall be deemed to be, simultaneous.
E. Ownership of Securities. (i) Upon the transfer of cash to Seller's
Account and the transfer of Eligible Securities to Buyer's Account, it is agreed
by Seller and Buyer that, subject to Seller's right of substitution pursuant to
Paragraph 6B and notwithstanding the credit of Income to Seller's Account
pursuant to Paragraph 5G, the Purchased Securities shall be for all purposes the
property of Buyer. Buyer agrees, however, that, subject to Paragraph 8 hereof
and the default provisions with respect to the Seller under the Master
Repurchase Agreement, it will resell to Seller on the Repurchase Date the
Purchased Securities at the Repurchase Price.
(ii) Buyer, Seller and Custodian agree that all Purchased
Securities and cash held in Buyer's Account from time to time will be held by
Custodian as agent of Buyer, that Custodian will take such actions with respect
to Buyer's Account and any Purchased Securities and cash therein as Buyer shall
direct, and that in no event shall any consent or Seller be required for the
taking of any such action by Custodian. Buyer hereby covenants that Buyer will
not instruct Custodian to deliver any Securities to any person other than Seller
until an Event of Default has occurred as to which Seller is the defaulting
party. The foregoing covenant is for Seller's benefit only and shall not
constitute a limitation on Buyer's right at any time to instruct Custodian and
Custodian's obligation to act upon such instructions. Custodian shall not be
liable for any Losses (as defined in Paragraph 9A) incurred or sustained by
Buyer, Seller or any third party as a result of Custodian transferring any
Purchased Securities or cash in Buyer's Account pursuant to Buyer's instructions
(whether or not subsequent to receipt of a Notice of Default) and shall have no
further obligation or responsibility to Seller or Buyer under this Custodial
Undertaking with respect to any Purchased Securities or cash transferred from
Buyer's Account.
(iii) Any instruction to Custodian to transfer Purchased
Securities or cash from Buyer's Account during the term of a Transaction shall
be set forth in a written notice. Custodian shall, as promptly as practicable
under the circumstances, act in accordance with such instructions; it being
understood and agreed that Custodian shall have no liability for its inability
to comply with Buyer's instructions if the rules or systems of the Book-Entry
System and/or applicable Clearing Corporation prevent Custodian from
transferring Purchased Securities from Buyer's Account. Buyer shall pay to
Custodian all applicable fees, costs and charges associated with such transfer
from Buyer's Account.
(iv) At all times during which Custodian maintains a financial
asset (as that term is used in the UCC) in Seller's Account, Custodian shall
maintain such asset in a quantity corresponding to the aggregate of all security
entitlements (as that term is defined in the UCC) it has established in favor of
Seller with respect to that financial asset.
F. No Lien or Pledge by Custodian. Custodian agrees that Purchased
Securities shall not be subject to any security interest, lien or right of
setoff by Custodian or any third party claiming through Custodian and Custodian
shall not pledge, encumber, hypothecate, transfer, dispose of, or otherwise
grant any third party an interest in, any Purchased Securities.
G. Payment of Income. Until such time that Custodian shall receive a
Notice of Default from Buyer pursuant to Paragraph 8, Custodian shall credit to
Seller's Account Income received by Custodian. After receipt of such Notice of
Default from Buyer, Custodian shall credit to Buyer's Account Income received by
Custodian.
H. Confirmations. Custodian shall provide Buyer and Seller with
confirmation statements reflecting Purchased Securities and cash positions in
Buyer's Account on each Business Day or as otherwise may be requested by Buyer.
Buyer and Seller shall promptly review all such confirmation statements and
shall promptly advise Custodian of any error, omission or inaccuracy in such
statements. Custodian shall undertake to promptly correct any errors, failures
or omissions that are reported to Custodian by Buyer or Seller. Any such
corrections shall be reflected on subsequent confirmation statements.
I. Deliveries by Custodian. Subject to this Custodial Undertaking, all
transfers of Securities or cash by Custodian to Buyer from Buyer's Account shall
be made to Buyer by delivery to the account(s) designated in Schedule III, as
may be amended from time to time by delivery to and receipt by Custodian of a
new Schedule III.
J. Term Transactions. In connection with any Transaction the Repurchase
Date of which is not the Business Day immediately following the Purchase Date
(each, a "Term Transaction"), Custodian shall (i) transfer at the beginning of
each Business Day after the Purchase Date (but not including the Repurchase
Date) all Purchased Securities subject to such Transaction from Buyer's Account
to Seller's Account against the transfer from Seller's Account to Buyer's
Account of cash in an amount equal to the Purchase Price for such Transaction
(such cash to constitute cash margin unless otherwise specified by Seller) and
(ii) transfer at the end of each Business Day after the Purchase Date (but not
including the Repurchase Date) from Buyer's Account to Seller's Account such
cahs margin against the transfer from Seller's Account to Buyer's Account of
Securities having a Margin Value equal to or greater than the amount of such
cash margin.
6. SUBSTITUTIONS OF SECURITIES
Buyer hereby authorizes Custodian, upon Oral or Written Instructions
from Seller, to transfer Purchased Securities to Seller against transfers to
Buyer's Account of substitute Eligible Securities ("Substitute Eligible
Securities") determined by Custodian to have an aggregate Margin Value equal to
or greater than the aggregate Repurchase Price relating to Purchased Securities
released hereunder. All Substitute Eligible Securities transferred to Buyer's
Account shall be deemed to be Purchased Securities.
7. REPURCHASE DATE
On the Repurchase Date for any Transaction, subject to Paragraph 8
hereof, Buyer hereby irrevocably instructs Custodian to tender to Seller the
Purchased Securities with respect to such Transaction and to transfer such
Purchased Securities from Buyer's Account to Seller's Account. Seller hereby
irrevocably instructs Custodian at the time Purchased Securities are transferred
to Seller's Account to make payment to Buyer of the Repurchase Price by debiting
cash from Seller's Account and crediting cash to Buyer's Account. If on the
Repurchase Date Seller's Account does not contain sufficient cash available to
repurchase all Purchased Securities with respect to any Transactions, Custodian
shall notify Seller and Buyer and Seller shall give Custodian Oral or Written
Instructions identifying which Purchased Securities, if any, are to be
repurchased and the Repurchase Price.
8. DEFAULT
In the event that Buyer or Seller delivers a Notice of Default to
Custodian, Custodian shall notify the defaulting party of its receipt of such
Notice of Default and act in accordance with the instructions of the
non-defaulting party with respect to such non-defaulting party's rights pursuant
to Paragraph 11 of the Master Repurchase Agreement (relating to Events of
Default). Custodian may fully rely without further inquiry on the statements set
forth in such Notice of Default. In addition, Buyer and Seller acknowledge and
agree that the provisions of Paragraph 12 of the Master Repurchase Agreement
(regarding Single Agreement) shall be fully effective with respect to all
Transactions entered into between them, irrespective of whether such
Transactions are entered into in connection with this Custodial Undertaking,
directly between Buyer and Seller or otherwise.
9. CONCERNING CUSTODIAN
A. Limitations of Liability; Indemnification. Custodian shall not be
liable for any costs, expenses, damages, liability or claims, including
reasonable fees of counsel (collectively, "Losses"), resulting from its action
or inaction in connection with this Custodial Undertaking, including Losses
which are incurred by reason of any action or inaction by the Book-Entry System,
any Clearing Corporation or Trust Receipt Issuer, or their successors or
nominees, except for those Losses arising out of (i) Custodian's negligence, bad
faith or willful misconduct, or (ii) the material breach by Custodian of any
provisions of this Custodial Undertaking. Under no circumstances shall Custodian
be liable to Buyer, Seller or any third party for special, indirect or
consequential damages, or lost profits or loss of business, arising under or in
connection with this Custodial Undertaking. Custodian may, with respect to
questions of law, apply for and obtain the advice and opinion of counsel, and
shall be fully protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. Buyer and Seller agree, jointly
and severally, to indemnify Custodian and to hold it harmless against any and
all Losses (including claims by Buyer or Seller) which are sustained by
Custodian as a result of Custodian's action or inaction in connection with this
Custodial Undertaking, except as provided above. It is expressly understood and
agreed that Custodian's right to indemnification hereunder shall be enforceable
against Buyer and Seller directly, without any obligation to first proceed
against any third party for whom they may act, and irrespective of any rights or
recourse that Buyer or Seller may have against any such third party. This
indemnity shall be a continuing obligation of Buyer and Seller notwithstanding
the termination of any Transactions or of this Custodial Undertaking.
B. No Guaranty by Custodian. It is expressly agreed and acknowledged by
Buyer and Seller that Custodian is not guaranteeing performance of or assuming
any liability for the obligations of Buyer or Seller hereunder nor is it
assuming any credit risk associated with Transactions hereunder, which
liabilities and risks are the responsibility of Buyer and Seller; further, it is
expressly agreed that Custodian is not undertaking to make credit available to
Seller or Buyer to enable it to complete Transactions hereunder.
C. No Duty of Inquiry. Without limiting the generality of the
foregoing, Custodian shall be under no obligation to inquire into, and shall not
be liable for:
(i) The validity of the issue of any Securities purchased or
sold by or for Buyer or Seller, the legality of the purchase or sale or the
validity or enforceability of any Trust Receipt received by Custodian hereunder;
(ii) The due authority of any Authorized Person to act on
behalf of Buyer or Seller with respect to cash or Securities held in Buyer's
Account or Seller's Account; or
(iii) The due authority of Buyer, Seller or any entities for
which Buyer acts to purchase, sell or hold any particular Security hereunder.
D. Securities in Default. Custodian shall not be under any duty or
obligation to take action to effect collection of any amount if the Securities
upon which such amount is payable are in default, or if payment is refused after
due demand or presentation.
E. Custodian Fee. Custodian shall be entitled to receive and Seller
agrees to pay to Custodian such compensation as may be agreed upon from time to
time between Custodian and Seller and Custodian's out-of-pocket expenses.
F. Reliance on Oral/Written Instructions. Custodian shall be entitled
to rely upon any Written Instructions or Oral Instruction received by Custodian
and reasonably believed by Custodian to be delivered by an Authorized Person.
Buyer and Seller agree to forward to Custodian Written Instructions confirming
any and all Oral Instructions in such manner that such Written Instructions are
received by Custodian by the close of business of the same day that such Oral
Instructions are given to Custodian. Buyer and Seller agree that the fact that
such confirming Written Instructions are not received or that contrary Written
Instructions are received by Custodian shall in no way affect the validity or
enforceability of the transactions previously authorized and effected by
Custodian.
G. Reliance on Pricing Services. Custodian is authorized to utilize any
generally recognized pricing information service (including brokers and dealers
of Securities) in order to perform its valuation responsibilities hereunder, and
Seller and Buyer agree to hold Custodian harmless from and against any Losses
incurred as a result of errors or omissions of any such pricing information
service, broker or dealer.
H. Force Majeure. Custodian shall not be responsible or liable for any
failure or delay in the performance of its obligations under this Custodial
Undertaking arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including without limitation, acts of God,
earthquakes, fires, floods, wars, civil or military disturbances, sabotage,
epidemics, riots, loss or malfunctions of utilities, computer (hardware or
software) or communications service, labor disputes, acts of civil or military
authority, or governmental, judicial or regulatory actions; provided, however,
that Custodian shall use commercially reasonable efforts to resume performance
as soon as possible.
I. No Additional Duties. Custodian shall have no duties or
responsibilities except such duties and responsibilities as are specifically set
forth in this Custodial Undertaking, and no covenant or obligation shall be
implied in this Custodial Undertaking against Custodian.
J. No Duty Regarding Derivatives. If Buyer and Seller have selected
Eligible Securities which derive all or a portion of their value from changes in
the value of underlying securities, mortgages or other obligations, or one or
more currencies, commodities, indices or other factors (hereinafter referred to
as "Derivative Securities"), the parties understand that Custodian shall have no
obligation to monitor whether any such Eligible Securities are also Derivative
Securities. Accordingly, the parties agree that anything in the Custodial
Undertaking to the contrary notwithstanding, it shall be Buyer's and Seller's
responsibility to ensure that Eligible Securities do not include Derivative
Securities unless they have otherwise agreed. Custodian shall have no liability
whatsoever for any loss, damage or expense arising out of the ineligibility of
Derivative Securities which are the subject of Transactions pursuant to the
Custodial Undertaking.
10. TERMINATION
Any of the parties hereto may terminate this Custodial Undertaking by
giving to the other parties a notice in writing specifying the date of such
termination, which shall be not less than thirty (30) days after the date of
giving such notice. Upon termination hereof, Seller shall pay to Custodian such
compensation as may be due to Custodian as of the date of such termination, and
shall likewise reimburse Custodian for any disbursements and expenses made or
incurred by Custodian and payable or reimbursable hereunder. If Buyer and Seller
do not provide Written Instructions designating a successor custodian prior to
the termination date, Custodian shall, give the Securities to Buyer in
accordance with Schedule III.
11. MISCELLANEOUS
A. Authorized Persons. Buyer and Seller each agrees to furnish to
Custodian a new Schedule II in the event that any Authorized Person ceases to be
an Authorized Person or in the event that other or additional Authorized Persons
are appointed and authorized. Until such new Schedule II is received, Custodian
shall be fully protected in acting under the provisions of this Custodial
Undertaking upon Oral Instructions or Written Instructions from a person
reasonably believed to be an Authorized Person as set forth in the last
delivered Schedule II.
B. Access to Books and Records. Upon reasonable request, Buyer and
Seller have access to Custodian's books and records maintained in connection
with their respective accounts under this Custodial Undertaking during
Custodian's normal business hours. Upon reasonable request, copies of any such
books and records shall be provided to Buyer or Seller at its expense.
C. Invalidity of any Provision. In case any provision in or obligation
under this Custodial Undertaking shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations shall not in any way be affected or impaired thereby,
and if any provision is inapplicable to any person or circumstances, it shall
nevertheless remain applicable to all other persons and circumstances.
D. Parties, Entire Agreement, Amendments.
(i) The Custodial Undertaking.Buyer, Seller, and Custodial
agree that this Custodial Undertaking constitutes the entire agreement among the
parties hereto with respect to Transactions subject to this Custodial
Undertaking and may not be amended or modified in any manner except by a written
agreement executed by the parties hereto.
(ii) The Custodial Undertaking and the Master Repurchase
Agreement. Buyer and Seller acknowledge and agree that the Master Repurchase
Agreement in conjunction with this Custodial Undertaking represents the entire
agreement between Buyer and Seller with respect to Transactions. Buyer and
Seller acknowledge and agree that Custodian is not party to the Master
Repurchase Agreement and is not bound by its terms.
E. Binding Agreement. This Custodial Undertaking shall extend to and
shall be binding upon the parties hereto, and their respective successors and
assigns; provided, however, that this Custodial Undertaking shall not be
assignable by any party without the written consent of the other parties.
F. Applicable Law/Jurisdiction. This Custodial Undertaking shall be
construed in accordance with the laws of the State of New York without regard to
the conflicts of law principles thereof. Each party hereto hereby consents to
the jurisdiction of a state or federal court situated in New York City, New York
in connection with any dispute arising hereunder. Each party hereto hereby
waives trial by jury in any proceeding involving, directly or indirectly, any
matter in any way arising out of, related to, or connected with, this Custodial
Undertaking.
G. Waiver of Immunity. To the extent that in any jurisdiction any party
may now or hereafter be entitled to claim, for itself or its assets, immunity
from suit, execution, attachment (before or after judgment) or other legal
process, each party irrevocably agrees not to claim, and it hereby waives, such
immunity in connection with this Custodial Undertaking.
H. Headings and References. The headings and captions in this Custodial
Undertaking are for reference only and shall not affect the construction or
interpretation of any of its provisions.
I. Counterparts. This Custodial Undertaking may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
such counterparts shall, together, constitute only one instrument.
J. Inconsistency with Master Repurchase Agreement. In the event of any
inconsistency between the terms and conditions of the Master Repurchase
Agreement and this Custodial Undertaking with respect to the rights, duties or
obligations of Custodian and Transactions subject to this Custodial Undertaking,
the terms and conditions of this Custodial Undertaking shall govern.
K. Notices. Any notice authorized or required by this Custodial
Undertaking shall be sufficiently given if addressed to the receiving party and
hand delivered or sent by mail, telex or facsimile to the individuals at the
addresses specified in Schedule IV or to such other person or persons as the
receiving party may from time to time designate in writing. Such notice shall be
effective upon receipt.
L. Confidentiality. The parties hereto agree not to disclose to any
other party and to keep confidential the terms and conditions of this Agreement
(including fee arrangements) and any amendments, supplement or Schedule hereto.
In the event that any party hereto breaches any provision of this section, and
any other party shall be entitled to temporary and permanent injunctive relief
against the breaching party without the necessity of proving actual damages.
Notwithstanding the foregoing, Custodian may disclose Buyer or Seller's name,
address, securities position and other information to such persons and to such
extent as required by law, the rules of any stock exchange or regulatory or
self-regulatory organization or any order or decree of any court or
administrative body that is binding on Custodian or any Clearing Corporation or
the terms of the organizational documents of the issuer of any Security or the
terms of any Security itself.
M. Parties Deemed Principals.Unless the parties signatory hereto
execute and deliver a Custodial Agency Annex pursuant to which the identity of
all principals for whom any party may act in connection with this Custodial
Undertaking is disclosed, each party shall be responsible for the performance of
its obligations hereunder as a principal. However, the execution and delivery of
a Custodial Agency Annex shall not relieve any party of its obligations
hereunder except as provided by applicable law.
IN WITNESS WHEREOF, the parties hereto have caused this
Custodial Undertaking to be executed by their respective corporate officers,
thereunto duly authorized, as of the ______ day of _________________, 19___.
____________________________ The Vanguard Group, Inc.
By:_________________________ By: Xxxxx X. Xxxxxx
Title: Title: Principal
JPMorgan Chase Bank
By:__________________________
Title:
SCHEDULE 1
SCHEDULE OF ELIGIBLE SECURITIES
SCHEDULE II
AUTHORIZED PERSONS
The following individuals have been designated as Authorized Persons
of Buyer and Seller, respectively, in connection with
the Custodial Undertaking In Connection With Master Repurchase Agreement
dated as of __________________.
BUYER
Please refer to Corporate Resolution.
SELLER
Name Signature
-------------------------- ---------------------------
-------------------------- ---------------------------
-------------------------- ---------------------------
-------------------------- ---------------------------
SCHEDULE III
BUYER'S ACCOUNT INFORMATION
Account Information for Delivery of Buyer's Securities and Cash
ABA:_____________________________
Bank Name:________________________
City:______________________________
Account Name:_____________________
Account Number:___________________
SCHEDULE IV
ADDRESS FOR NOTICES
TO SELLER:
===============================
===============================
TO BUYER:
The Vanguard Group, Inc.
Attention: Xx. Xxxxx X. Xxxxxx, VM# V31
000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Fixed Income Group
Telephone: (000) 000-0000
Fax: (000) 000-0000
TO CUSTODIAN:
JPMorgan Chase Bank
Four Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxx, Senior Vice President
Broker Dealer Clearance Department
Telephone: (000) 000-0000
Fax: (000) 000-0000
SCHEDULE V
This Annex __ forms a part of the Custodial Undertaking in Connection
with Master Repurchase Agreement dated as of
______________, between ________________ , The Vanguard Group, Inc.,
and JPMorgan Chase Bank.
1. This Agreement is entered into by The Vanguard Group, Inc., not on
its own behalf, but on behalf of the following registered investment companies
for which it provides investment advisory or administrative services:
Vanguard Admiral Funds
Vanguard Admiral Treasury Money Market Fund
Vanguard Bond Index Funds
Vanguard Intermediate-Term Bond Index Fund
Vanguard Long-Term Bond Index Fund
Vanguard Short-Term Bond Index Fund
Vanguard Total Bond Market Index Fund
Vanguard Inflation Protected Securities Fund
Vanguard CMT Funds
Vanguard Market Liquidity Fund
Vanguard Municipal Cash Management Fund
Vanguard Xxxxxxx Funds
Vanguard PRIMECAP Fund
Vanguard Target Retirement Income Fund Vanguard Target
Retirement 2005 Fund Vanguard Target Retirement 2010 Fund
Vanguard Target Retirement 2015 Fund Vanguard Target
Retirement 2020 Fund Vanguard Target Retirement 2025 Fund
Vanguard Target Retirement 2030 Fund Vanguard Target
Retirement 2035 Fund Vanguard Target Retirement 2040 Fund
Vanguard Target Retirement 2045 Fund Vanguard Target
Retirement 2050 Fund
Vanguard Convertible Securities Fund
Vanguard Convertible Securities Fund
Vanguard Explorer Fund
Vanguard Explorer Fund
Vanguard Fenway Funds
Vanguard Equity Income Fund
Vanguard Growth Equity Fund
Vanguard PRIMECAP Core Fund
Vanguard Fixed Income Securities Funds
Vanguard GNMA Fund
Vanguard High-Yield Corporate Fund
Vanguard Intermediate-Term Investment-Grade Fund Vanguard
Intermediate-Term Treasury Fund Vanguard Long-Term
Investment-Grade Fund Vanguard Long-Term Treasury Fund
Vanguard Short-Term Investment-Grade Fund Vanguard Short-Term
Federal Fund Vanguard Short-Term Treasury Fund
Vanguard Horizon Funds
Vanguard Capital Opportunity Fund
Vanguard Global Equity Fund
Vanguard Strategic Equity Fund
Vanguard Strategic Small-Cap Equity Fund
Vanguard International Equity Index Funds Vanguard Emerging Markets
Stock Index Fund Vanguard European Stock Index Fund Vanguard
FTSE All-World ex-US Index Fund Vanguard Total World Stock
Index Fund Vanguard Pacific Stock Index Fund
Vanguard Malvern Funds
Vanguard Asset Allocation Fund
Vanguard Capital Value Fund
Vanguard U.S. Value Fund
Vanguard Xxxxxxxxxx Funds
Vanguard Market Neutral Fund
Vanguard Xxxxxx Growth Fund
Vanguard Xxxxxx Growth Fund
Vanguard Quantitative Funds
Vanguard Growth and Income Fund
Vanguard Structured Broad Market Fund
Vanguard Structured Large-Cap Equity Fund
Vanguard Structured Large-Cap Growth Fund
Vanguard Structured Large-Cap Value Fund
Vanguard Specialized Funds
Vanguard Energy Fund
Vanguard Health Care Fund
Vanguard Precious Metals and Mining Fund
Vanguard REIT Index Fund
Vanguard Dividend Growth Fund
Vanguard Tax-Managed Funds
Vanguard Tax-Managed Balanced Fund
Vanguard Tax-Managed Capital Appreciation Fund
Vanguard Tax-Managed Growth and Income Fund
Vanguard Tax-Managed International Fund
Vanguard Tax-Managed Small Cap Fund
Vanguard Wellesley Income Fund
Vanguard Wellesley Income Fund
Vanguard Wellington Fund
Vanguard Wellington Fund
Vanguard Whitehall Funds
Vanguard High Dividend Yield Index Fund
Vanguard International Explorer Fund
Vanguard Mid-Cap Growth Fund
Vanguard Selected Value Fund
Vanguard New York Tax-Free Funds
Vanguard New York Long-Term Tax-Exempt Fund
Vanguard New York Tax-Exempt Money Market Fund
Vanguard Ohio Tax-Free Funds
Vanguard Ohio Long-Term Tax-Exempt Fund
Vanguard Ohio Tax-Exempt Money Market Fund
Vanguard Pennsylvania Tax-Free Funds
Vanguard Pennsylvania Long-Term Tax-Exempt Fund
Vanguard Pennsylvania Tax-Exempt Money Market Fund
Vanguard California Tax-Free Funds
Vanguard California Intermediate-Term Tax-Exempt Fund
Vanguard California Long-Term Tax-Exempt Fund
Vanguard California Tax-Exempt Money Market Fund
Vanguard Florida Tax-Free Funds
Vanguard Florida Long-Term Tax-Exempt Fund
Vanguard New Jersey Tax-Free Funds
Vanguard New Jersey Long-Term Tax-Exempt Fund
Vanguard New Jersey Tax-Exempt Money Market Fund
Vanguard Massachusetts Tax-Exempt Funds
Vanguard Massachusetts Tax-Exempt Fund
Vanguard Municipal Bond Funds Vanguard High-Yield Tax-Exempt Fund
Vanguard Insured Long-Term Tax-Exempt Fund Vanguard
Intermediate-Term Tax-Exempt Fund Vanguard Limited-Term
Tax-Exempt Fund Vanguard Long-Term Tax-Exempt Fund Vanguard
Short-Term Tax-Exempt Fund Vanguard Tax-Exempt Money Market
Fund
Vanguard Valley Forge Funds
Vanguard Balanced Index Fund
Vanguard Managed Payout Growth Focus Fund
Vanguard Managed Payout Growth and Distribution Fund
Vanguard Managed Payout Distribution Focus Fund
Vanguard Windsor Funds
Vanguard Windsor Fund
Vanguard Windsor II Fund
Vanguard World Fund
Vanguard Extended Duration Treasury Index Fund Vanguard FTSE
Social Index Fund Vanguard International Growth Fund Vanguard
U.S. Growth Fund Vanguard Consumer Discretionary Index Fund
Vanguard Consumer Staples Index Fund Vanguard Energy Index
Fund Vanguard Financials Index Fund Vanguard Health Care Index
Fund Vanguard Industrials Index Fund Vanguard Information
Technology Index Fund Vanguard Materials Index Fund Vanguard
Telecommunication Services Index Fund Vanguard Utilities Index
Fund
Vanguard Variable Insurance Fund Balanced Portfolio Capital Growth
Portfolio Diversified Value Portfolio Equity Income Portfolio
Equity Index Portfolio Growth Portfolio High-Yield Bond
Portfolio International Portfolio Mid-Cap Index Portfolio
Money Market Portfolio REIT Index Portfolio
Short-Term Investment-Grade Portfolio
Small Company Growth Portfolio
Total Bond Market Index
Total Stock Market Index
Vanguard Index Funds
Vanguard 500 Index Fund
Vanguard Extended Market Index Fund
Vanguard Growth Index Fund
Vanguard Large-Cap Index Fund
Vanguard Mega Cap 300 Index Fund
Vanguard Mega Cap 300 Growth Index Fund Vanguard Mega Cap 300
Value Index Fund Vanguard Mid-Cap Index Fund Vanguard Mid-Cap
Growth Index Fund Vanguard Mid-Cap Value Index Fund Vanguard
Small Cap Index Fund Vanguard Small Cap Growth Index Fund
Vanguard Small Cap Value Index Fund Vanguard Total Stock
Market Index Fund Vanguard Value Index Fund
Vanguard Trustees Equity Fund
Vanguard International Value Fund
Vanguard Diversified Equity Fund
Vanguard Money Market Reserves
Vanguard Federal Money Market Fund
Vanguard Prime Money Market Fund
Vanguard Treasury Fund
Vanguard Treasury Money Market Fund
Vanguard Treasury Money Market II Fund
Vanguard STAR Funds
Vanguard Developed Markets Index Fund Vanguard Institutional
Developed Markets Index Fund Vanguard LifeStrategy
Conservative Growth Fund Vanguard LifeStrategy Growth Fund
Vanguard LifeStrategy Income Fund Vanguard LifeStrategy
Moderate Growth Fund Vanguard STAR Fund Vanguard Total
International Stock Index Fund
Vanguard Institutional Index Funds
Vanguard Institutional Index Fund
Vanguard Institutional Total Bond Market Index Fund
Vanguard Institutional Total Stock Market Index Fund
