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CUSTODY AGREEMENT
This Agreement made this day of , 1996 between VANGUARD TREASURY FUND
(hereinafter called .Fund.) and CORESTATES BANK, N.A. (hereinafter called
.Bank.) applies to Exhibit A.
WITNESSETH
1. Appointment of Agent. Fund hereby appoints Bank as its agent and
custodian, and Bank hereby accepts such appointment and agrees to act as agent
and custodian, on the terms hereinafter specified.
2. Custody of Assets. Bank shall act as custodian of all cash,
securities, evidences of indebtedness and other property, including all income
thereon and proceeds from the sale of maturity thereof (collectively, the
.Assets.), from time to time delivered to or received by it for Fund. The Assets
shall be held in the appropriate account or accounts as may be established from
time to time upon Fund's written request and shall be segregated at all times
(except for cash and Assets held in book-entry form) from the securities and
property of any other person or entity.
3. Assets Held in Securities Depository or Book-Entry System. As used
herein, the term .Assets. shall also include all securities held on behalf of
Fund in The Depository Trust Company (.DTC.) and registered in the account of
Bank or Bank's subagent or subcustodian with DTC or Cede & Co., as its nominee,
and all securities held on behalf of Fund in the Participant Trust Company
(.PTC.) and registered in the account of Bank or Bank's subagent or subcustodian
in such book-entry system, and all securities held on behalf of Fund, in the
Federal Reserve/Treasury book-entry system and registered in the account of Bank
or Bank's subagent or subcustodian in such book-entry system, provided that, in
either case, Bank shall provide Fund with the name of any such subagent or
subcustodian promptly following any appointment thereof hereunder and shall at
all times be fully responsible for all actions or omissions of any such subagent
or subcustodian to the same extent as if such actions or omissions where those
of Bank.
4. Registration of Assets. All Assets which are in registered form
shall, unless Bank is otherwise instructed (as hereafter defined) in writing,
be registered in accordance with paragraph 3 above or in the name of Bank of
Bank's subagent or subcustodian or nominees thereof, provided that Bank shall
provide Fund with the name of any such subagent or subcustodian or nominee
promptly following any appointment thereof hereunder and shall at all times be
fully responsible for all actions or omissions of any such subagent or
subcustodian or nominee to the same extent as if such actions or omissions
were those of Bank. For purposes of this Agreement, the term .Nominees. shall
refer to Bank and such other entities or persons in whose name(s) Assets may be
registered in accordance herewith.
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5. Reports. Bank shall forward or cause to be forwarded to Fund any
financial reports, proxy statements, tender offers or other materials received
by it with respect to Assets registered in the name of the Nominees. Bank shall
promptly forward or cause to be forwarded to Fund all proxies with respect to
such Assets executed in blank by the appropriate Nominees together with all
pertinent information and documents received by Bank in connection with such
proxies.
6. Income of Assets. (a) Bank shall take all steps necessary to collect
the dividends, interest and other income on the Assets and shall credit said
income on payable date to the appropriate account designated by Fund from time
to time in Available Funds as determined by the Assets. All income credited to
Fund's account shall be promptly reinvested or distributed to Fund in
accordance with Fund's Instructions given from time to time.
(b) Unless otherwise instructed in writing, Bank shall retain
in the appropriate account of Fund any stock dividends, subscription rights and
other non-cash distributions on the Assets, or the proceeds from the sale of
any distributions. Bank shall notify Fund upon the receipt of any such non-cash
item.
(c) Bank or its Nominee is hereby authorized to sign any
declarations, endorsements, affidavits, certificates of ownership or other
documents which may be required with respect to all coupons, registered
interest, dividends or other income on the Assets.
7. Purchases and Sales of Assets. (a) Bank shall promptly effect
purchases and sales of the Assets in accordance with Fund's Instructions from
time to time and shall take all steps necessary to collect the proceeds of any
Assets which are sold, redeemed or which have matured and shall promptly deposit
or withdraw said proceeds in Available Funds as determined by the Assets in the
appropriate account designated by Fund from time to time, provided that Bank
shall not be responsible for the collection of Assets called for redemption or
otherwise payable (other than by reason of sale or other disposition by Bank)
unless notice thereof is published in a national financial reporting services
Bank subscribes, including but not limited to, Financial Information Services,
XX Xxxxxx, or Wall Street Journal or notice is otherwise received by Bank. Bank
shall not be under any duty to advise or recommend any sales or purchases of
Assets for Fund's account.
(b) Bank shall effect the Corporate Actions in accordance with
the Fund's Instructions and shall take the steps necessary to collect the
proceeds in Cash and/or assets resulting from any Corporate Action as long as
notice of such Corporate Action is published in the national reporting
services described above.
(c) Bank shall not be under any duty to advise or recommend any
sales, or purchases of assets or response to Corporate Actions notifications for
Fund's account.
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8. Limitation of Liability: Responsibilities. (a) Bank shall not be
liable for any loss or damage suffered by Fund as the result of any act or
omission of any broker or other agent engaged by Fund in effecting purchases,
sales or exchanges of Assets except to the extent of any liability caused by (i)
the negligence, of Bank or its subagent or subcustodian, or (ii) the failure of
Bank or its subagent or subcustodian to perform any acts required in this
Agreement. Bank shall not be liable for loss or damage caused either directly or
indirectly by invasion by a foreign power, insurrection, riot, war, nuclear
disaster, order of civil authority, unrelated to any act or omission by agent,
or subagent or subcustodian, or any causes beyond its control which cannot be
covered by Bank's insurance.
(b) Bank shall not be responsible to file any tax returns or
pay any taxes due in connection with the Assets held hereunder and the income
therefrom.
(c) Bank shall be under no obligation to advise the Fund of due
or tender dates for those Assets which have tender options attached to, stamped
on, or incorporated in the Asset itself.
9. Statements. Bank shall deliver to Fund no less frequently than
monthly, a statement of all accounts maintained hereunder showing all receipts,
disbursements and other transactions affecting the Assets during the preceding
month and a statement of the cost and market value of each of the Assets at the
end of the preceding month. The scope, content and frequency of the statements
required hereunder may be changed from time to time upon the mutual written
agreement of the parties hereto.
10. Other Acquisitions. Fund authorizes Bank to act, and Bank agrees
that it shall act for Fund from time to time, in the acceptance of the delivery
from a fiduciary or a donor to the Fund of securities, cash or other property.
Upon delivery to it of securities, cash or other property to be credited to
Fund's account, whether as the result of a purchase or distribution of a
bequest or gift, Bank shall promptly notify Fund and issue to it a receipt
setting forth an accurate description of each item received, together with the
face value thereof in the case of an evidence of indebtedness and the number of
shares in the case of stock.
11. Withdrawal of Assets. (a) Any securities and evidence of
indebtedness included in the Assets may be withdrawn from Bank in accordance
with Fund's Instructions; provided; however that except as provided below,
such Instructions shall direct that the delivery of any such securities and
evidences of indebtedness by Bank shall be made only to (i) a bank or trust
company or its nominee, (ii) a broker or its nominee, (iii) the DTC or its
nominee, (iv) the PTC, or its nominee, (v) The Federal Reserve, or (vi) in the
case of commercial paper, to the obligor upon payment. In the event the
Instructions direct the delivery of Assets to any person or entity other than as
set forth above, such Instructions shall be in writing by the Fund or otherwise
be authorized pursuant to a resolution duly adopted by the Fund and provided to
agent in accordance with paragraph 14(c) below.
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(b) Upon receipt of such Instructions and subject to the terms
and conditions thereof, Bank shall deliver the items specified therein to the
person or entity designated and shall obtain a proper receipt therefor.
(c) In connection with the sale of any Assets, Bank shall make
delivery of such Assets only against payment therefor in federal funds or by
certified or bank cashier's check, provided that, consistent with customary
practice at the place of delivery, Bank may (i) make delivery for inspection
prior to sale at buyer's location, upon delivery to Bank of a proper receipt
therefor, to a member of a registered national securities exchange or bank or
trust company, and (ii) may accept as payment for such delivered assets an
uncertified check of such an entity. In no event shall Bank be liable hereunder
for not delivering Assets in accordance with Fund's Instructions where such
delivery is withheld by reason of the purchaser's inability or unwillingness to
make a payment therefor in federal funds or by certified or bank cashier's
check or as otherwise provided in this paragraph 11(c).
(d) Any cash included in the Assets may be withdrawn from Bank
in accordance with the Fund's Instructions, provided, however, that subject to
a transfer or other disposition of securities by bookkeeping entry in
connection with Bank's participation (through its agent) in DTC, PTC, or the
Federal Reserve/Treasury book-entry system, Bank shall make payments of cash
to, or from the account of, Fund only (i) upon the purchase of securities or
other Assets and delivery of such securities or other Assets to Bank in proper
form for transfer; (ii) to Fund's account with CoreStates Bank N.A. or with
such other bank as Fund may designate by written Instructions from time to
time; (iii) for the payment of Bank's expenses and fees authorized with this
Agreement; and (iv) for payments in connection with the conversion, exchange or
surrender of securities included in the Assets. In making any cash payments,
Bank shall receive written Instructions authorized by the Fund.
(e) Bank shall promptly notify the Fund of all withdrawals from
or deliveries to Bank for Fund's account hereunder.
12. Advancement of Funds. If at any time the Fund has a negative cash
balance, Bank shall be deemed to have made an advance to Fund in the amount of
such negative cash balance. To secure any such advance, the Fund hereby grants
to Bank a continuing lien upon and security interest in all Investments (as
hereinafter defined) which are (a) held in, evidenced by or identified with the
Account, or (b) otherwise held by Bank in custody for the Fund or held by Bank
or any third party in the name of Bank on behalf of the Fund. As used in the
preceding sentence the term .Investments. means instruments and securities
(whether in certificated, book entry or uncertificated form), deposit accounts,
other investments, however classified under applicable law, and all proceeds of
all of the foregoing. Said lien and security interest is in addition to any
right of setoff which Bank may have.
13. Indemnity. With respect to any Assets received by Bank and
registered in the name of Bank or Bank's subagent or subcustodian or nominee or
held on behalf of Owner in DTC, PTC, or the Federal Reserve/Treasury book-entry
system. Bank shall be fully responsible and
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liable for and shall indemnify and hold Fund harmless against any loss, damage
or expense (including attorney's fees and amounts paid with Bank's consent in
settlement of any claim or action) which Fund may sustain resulting from (i) any
act of Bank, its subagent or subcustodian or nominee, or any employee or other
agent of any of them which has not been authorized hereunder, or (ii) any
failure by Bank, or its subagent or subcustodian or nominee to perform any of
its obligations under this Agreement. Except with respect to the extent same may
result, directly or indirectly from any negligent act or omission or willful
misconduct of Bank, its subagent or subcustodian or nominee, or any employee or
other agent of any of them or any failure of Bank or its subagent or
subcustodian or nominee, to perform any of Bank's obligations under this
Agreement, Fund shall indemnify and hold Bank or any subagent, subcustodian or
nominee harmless against any liability, loss, damage or expense (including
attorney's fees and amounts paid, with Fund's consent, in settlement of any
claim or action) with Bank or any subagent, subcustodian or nominee may sustain
resulting from its performance in accordance with this Agreement.
14. Instructions, Notices and Authorized Persons.
(a) As used in this Agreement, the term .Instructions. or
.Instructed. means a request or order given or delivered to Bank by the Fund.
Unless specifically required herein to be in writing, Instructions shall be
promptly confirmed in writing. Failure to provide a written confirmation of
oral Instructions shall not invalidate any such Instructions.
(b) Any notices, confirmations and receipts required hereunder
to be delivered by Bank to Fund, unless otherwise specifically provided, shall
be delivered by Bank to the Fund. The Fund shall certify to Bank, as required,
the names of the persons who, from time to time, shall have been duly appointed
to act as Fund.
(c) Fund will from time to time file with Bank a certified copy
of a corporate resolution or similar document as appropriate authorizing person
or persons to give proper instructions and specifying the class of instructions
that may be given by each person to Bank under this Agreement.
(d) Bank may rely and shall be protected in acting upon any
oral or written (including telegraph and other mechanical) instructions,
request, letter of transmittal, certificate, opinion of counsel, statement,
instrument, report, notice, consent, order, or other paper or document
reasonably believed by it to be genuine and to have been signed forwarded or
presented by Fund or designee.
15. Audit of Account. Fund, or its designated representative, shall
have at all reasonable times free access to the books and records of Bank
relating to the accounts created by or pursuant to its Agreement for the
purpose of audit, or otherwise, and to the Assets held by Bank hereunder and
its records relating to Bank's or its subagents' or subcustodians' accounts
with DTC, PTC and the Federal Reserve/Treasury book-entry system or otherwise
on behalf of Fund for the purpose of examination.
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16. Fees and Expenses. Bank shall notify Fund of any changes and
out-of-pocket expenses in connection with the performance of its duties
hereunder and Fund shall pay Bank all prior charges and expenses of Bank and
its Nominee. Bank's compensation for its services hereunder shall be charged at
the rate agreed upon in Addendum A. There may not be any change to this
Addendum unless mutually agreed upon in writing by the Fund and the Bank.
17. Amendments or Termination. This Agreement contains the entire
understanding between the Fund and the Bank concerning the subject matter of
this Agreement, supersedes all other Custody Agreements of dates previous and
may be amended only in writing signed by both parties. No term or provision of
this Agreement may be modified or waived unless in writing and signed by the
party against whom such waiver or modification is sought to enforce. Either
parties' failure to insist at any time upon strict compliance with this
Agreement or with any of the terms hereunder, or any continued course of such
conduct on the part of either party shall in no event constitute or be
considered a waiver by either party of any of its rights hereunder. This
Agreement may be terminated at any time provided such effective time shall be
not less than 60 days and not more than 90 days from the date of written notice
of termination.
18. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the Commonwealth of Pennsylvania.
Accepted:
Attest: VANGUARD TREASURY FUND
By: _____________________ By:
______________________________
Date: ________________________
CoreStates Bank, N.A.
By: By:
_______________________ ______________________________
Date: ________________________
