CUSTODY AGREEMENT
This Agreement made this 25 th day of April , 2000 between VANGUARD Xxxxxxx
Social Index Fund (herein after called Owner) and FIRST UNION NATIONAL BANK
(hereinafter called Agent).
W I T N E S S E T H
1. APPOINTMENT OF AGENT. Owner hereby appoints Agent as its
agent and custodian, and Agent hereby accepts such appointment and agrees to act
as agent and custodian, on the terms hereinafter specified.
2. CUSTODY OF ASSETS. Agent 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 Owner. The Assets
shall be held in the appropriate account or accounts as may be established from
time to time upon Owner'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 Owner in The Depository Trust Company (DTC) and registered in the
account of Agent or Agent's subagent or subcustodian with DTC or Cede & Co., as
its nominee, and all securities held on behalf of Owner in The Participant Trust
Company (PTC) and registered in the account of Agent or Agent's subagent or
subcustodian in such book-entry system, and all securities held on behalf of
Owner, in the Federal Reserve/Treasury book-entry system and registered in the
account of Agent or Agent's subagent or subcustodian in such book-entry system,
PROVIDED that, in either case, Agent shall provide Owner 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 Agent.
4. REGISTRATION OF ASSETS. All Assets which are in registered
form shall, unless Agent is otherwise Instructed (as hereafter defined) in
writing, be registered in accordance with paragraph 3 above or in the name of
Agent of Agent's subagent or subcustodian or nominees thereof, PROVIDED that
Agent shall provide Owner 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 s if such actions or omissions were
those of Agent. For purposes of this Agreement, the term Nominees shall refer to
Agent and such other entities or persons in whose name(s) Assets may be
registered in accordance herewith.
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5. REPORTS. Agent shall forward or cause to be forwarded to
Owner any financial reports, proxy statements, tender offers or other materials
received by it with respect to Assets registered in the name of the Nominees.
Agent shall promptly forward or cause to be forwarded to Owner all proxies with
respect to such Assets executed in blank by the appropriate Nominees together
with all pertinent information and documents received by Agent in connection
with such proxies.
6. INCOME OF ASSETS. (a) Agent 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
Owner from time to time in Clearinghouse or Available Funds as determined by the
Assets. All income credited to Owner's account shall be promptly reinvested or
distributed to Owner in accordance with Owner's Instructions given from time to
time.
(b) Unless otherwise instructed in writing, Agent shall
retain in the appropriate account of Owner any stock
dividends, subscription rights and other non-cash
distributions on the Assets, or the proceeds from the sale
of any distributions. Agent shall notify Owner upon the
receipt of any such non-cash item.
(c) Agent 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) Agent shall promptly
effect purchases and sales of the Assets in accordance with Owner'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 Clearinghouse or Available Funds as
determined by the Assets in the appropriate account designated by Fund from time
to time, PROVIDED that agent 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 Agent) unless notice thereof is published in a national
financial reporting services Agent subscribes, including but not limited to,
Financial Information Services, XX Xxxxxx, or Wall Street Journal or notice is
otherwise received by Agent. Agent shall not be under any duty to advise or
recommend any sales or purchases of Assets for Owner's account.
(b) Agent shall effect the Corporate Actions in
accordance with the Owner's Instructions and shall take all
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) Agent shall not be under any duty to advise or
recommend any sales, or purchases of assets or response to
Corporate Actions notifications for Owner's account.
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8. LIMITATION OF LIABILITY; Responsibilities. (a) Agent shall
not be liable for any loss or damage suffered by Owner as the result of any act
or omission of any broker or other agent engaged by Owner in effecting
purchases, sales or exchanges of Assets except to the extent of any liability
caused by (I) the negligence, of Agent or its subagent or subcustodian, or (ii)
the failure of Agent or its subagent or subcustodian to perform any acts
required in this Agreement. Agent 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 Agent's insurance.
(b) Agent 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) Agent shall be under no obligation to advise the
Owner of due or tender dates for those Assets which have
tender options attached to, stamped on, or incorporated in
the Asset itself.
9. STATEMENTS. Agent shall deliver to Owner 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. Owner authorizes Agent to act, and
Agent agrees that it shall act for Owner from time to time, in the acceptance of
the delivery from a fiduciary or a donor to the Owner of securities, cash or
other property. Upon delivery to it of securities, cash or other property to be
credited to Owner's account, whether as the result of a purchase or distribution
of a bequest or gift, Agent shall promptly notify Owner 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 Agent in accordance
with Owner'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 Agent 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 Owner or otherwise be
authorized pursuant to a resolution duly adopted by the Owner 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, Agent 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, Agent
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, Agent may (I) make delivery for
inspection prior to sale at buyer's location, upon delivery
to Agent 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 Agent be liable hereunder for not delivering Assets in
accordance with Owner'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 Agent in accordance with the Owner's Instructions,
provided, however, that subject to a transfer or other
disposition of securities by bookkeeping entry in connection
with Agent's participation (through its agent) in DTC, PTC,
or the Federal Reserve/Treasury book-entry system, Agent
shall make payments of cash to, or from the account of,
Owner only (I) upon the purchase of securities or other
Assets and delivery of such securities or other Assets to
Agent in proper form for transfer; (ii) to Owner's account
with First Union National Bank or with such other bank as
Owner may designate by written Instructions from time to
time; (iii) for the payment of Agent'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, Agent shall receive written Instructions
authorized by the Owner.
(e) Agent shall promptly notify the Owner of all
withdrawals from or deliveries to Bank for Owner's account
hereunder.
12. ADVANCEMENT OF FUNDS. If at any time the Owner has a
negative cash balance, Agent shall be deemed to have made an advance to Owner in
the amount of such negative cash balance. To secure any such advance, the Owner
hereby grants to Agent 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 Agent in custody for the
Owner or held by Agent or any third party in the name of Agent on behalf of the
Owner. 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 Agent may have.
13. INDEMNITY. With respect to any Assets received by Agent
and registered in the name of Agent or Agent's subagent or subcustodian or
nominee or held on behalf of Owner in DTC, PTC, or the Federal Reserve/Treasury
book-entry system, Agent shall be fully responsible and
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liable for and shall indemnify and hold Owner harmless against any loss, damage
or expense (including attorney's fees and amounts paid with Agent's consent in
settlement of any claim or action) which Owner may sustain resulting from (I)
any act of Agent, 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 Agent, 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 Agent, its subagent or subcustodian or nominee, or any employee or
other agent of any of them or any failure of Agent or its subagent or
subcustodian or nominee, to perform any of Agent's obligations under this
Agreement, Owner shall indemnify and hold Agent or any subagent, subcustodian or
nominee harmless against any liability, loss, damage or expense (including
attorney's fees and amounts paid, with Owner's consent, in settlement of any
claim or action) with Agent 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 Agent by the Owner. 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 Agent to Owner, unless otherwise specifically provided, shall be
delivered by Agent to the Owner. The Owner shall certify to Agent, as required,
the names of the persons who, from time to time, shall have been duly appointed
to act as Owner.
(c) Owner will from time to time file with Agent 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 Agent under this Agreement.
(d) Agent 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 Owner or designee.
15. AUDIT OF ACCOUNT. Owner, or its designated representative,
shall have at all reasonable times free access to the books and records of Agent
relating to the accounts created b or pursuant to its Agreement for the purpose
of audit, or otherwise, and to the Assets held by Agent hereunder and its
records relating to Agent's or its subagent's or subcustodian's accounts with
DTC, PTC and the Federal Reserve/Treasury book-entry system or otherwise on
behalf of Owner for the purpose of examination.
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16. FEES AND EXPENSES. Agent shall notify Owner of any changes
and out-of- pocket expenses in connection with the performance of its duties
hereunder and Owner shall pay Agent all prior charges and expenses of Agent and
its Nominee. Agent'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 Owner and the custodian.
17. AMENDMENTS OR TERMINATION. This Agreement contains the
entire understanding between the Owner and the Agent 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 Xxxxxxx Social Index Fund
By:/s/ Xxxxx Xxxxxxxx By: /s/ Xxxxxx Xxxxxxx
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Date: April 26, 2000
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FIRST UNION NATIONAL BANK
By:/s/ Xxxx Xxxxxx By:/s/ Xxxx Xxxxxx
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Date: April 26, 2000
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