SPECIAL SERVICING AGREEMENT
Agreement dated as of March 1, 1985, between VANGUARD STAR FUND, a
Pennsylvania business trust ("Fund"), and THE VANGUARD GROUP, INC., a
Pennsylvania corporation ("Vanguard").
WHEREAS, the Fund is an investment company which will register under the
Investment Company Act of 1940;
WHEREAS, Vanguard is a service company which provides management,
administrative, transfer agency, dividend disbursing and other services to
investment companies and others; and
WHEREAS, the fund desires to retain Vanguard to render certain management,
administrative, transfer agency, dividend disbursing and other services to the
Fund, and Vanguard is willing to render such services;
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1 . APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints Vanguard to act as administrator to the Fund for
the period and on the terms set forth in this Agreement. Vanguard accepts such
appointment and agrees to render the services and provide, at its own expense,
the office space, .furnishings and equipment and the personnel required by it to
perform the services on the terms and for the compensation herein provided. In
connection with such appointment, the Fund will deliver to Vanguard copies of
each of the following documents and will deliver to it all future amendments and
supplements, if any:
A. A copy of the presently in effect and Declaration of Trust of the Fund
as as amended from time to time;
B. A copy of the Fund's By-Laws as presently in as amended from time to
time; effect and
c. A copy of the resolution of the Fund's Board of Trustees authorizing
this Agreement:
D. A copy of any resolution of the Board of Trustees of the Fund specifying
the form of share certificate authorized by that Board;
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E. A copy of the Fund's registration statement on Form N-l when prepared,
and all amendments thereto;
F. Each resolution of the Board of Trustees of the Fund establishing any
class or series of its shares or authorizing any change with respect to any
class or series of its shares;
G. A copy of any resolution of the Fund's Board of Trustees authorizing:
(1) certain officers and employees of Vanguard to give instructions to the
Fund's Custodian pursuant to the Custodian Agreement and (2) certain officers
and employees of Vanguard to sign checks and pay expenses on behalf of the
Trust;
H. A copy of any Investment Advisory Agreement to which the Fund may become
a party;
I. A copy of the Custodian Agreement between the Fund and the Fund's
Custodian Bank:
J. A copy of the Licensing Agreement between the Fund and the Vanguard
Group of Investment Companies;
K. A copy of the Fund's Distribution Agreement with Vanguard Marketing
Corporation, (a subsidiary of Vanguard); and
L. Such other certificates, documents or opinions which Vanguard may in its
reasonable discretion, deem necessary or appropriate in the proper performance
of its duties.
2 . REPRESENTATIONS AND WARRANTIES OF VANGUARD
Vanguard represents and warrants to the Fund that:
A. It is a corporation duly organized and existing in good standing under the
laws of the Canmonwealth of Pennsylvania.
B. It is duly qualified to carry on its business in the Commonwealth of
Pennsylvania.
C. It is empowered under applicable laws and by its charter and by-laws to
enter into and perform the services contemplated in this Agreement. D. All
requisite corporate proceedings have been taken to authorize it to enter into
and perform this Agreement.
E. It has and will continue to have and maintain the necessary facilities,
equipmerit and personnel to perform its duties and obligations under this
Agreement.
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3 . AUTHORIZED SHARES
The Fund certifies to Vanguard that as of the close of business on the date
of this Agreement, it has the authority to issue an unlimited number of Shares
of Beneficial Interest (the "Shares") of which approximately are allocated to
its First Series.
4. SERVICES PROVIDED BY VANGUARD
Vanguard shall discharge the following responsibilities subject to the
control of the Fund's Board of Trustees, and in compliance with the objectives,
policies and limitations set forth in the Fund's registration statement, By-Laws
and applicable laws and regulations.
A. GENERAL ADMINISTRATION. Under the direction of the Fund's Board of
Trustees, Vanguard shall manage, administer, and conduct the general business
activities of the Fund other than those which have been contracted to third
parties by the Fund. Vanguard shall provide the personnel and facilities
necessary to perform such general business activities under the supervision of
the Fund's Board of Trustees and its Officers. Vanguard will furnish the Fund
with the services of its personnel to serve as Officers of the Fund.
B. ACCOUNTING. Vanguard shall provide the following accounting services to
the Fund:
1) Maintenance of the books and records and accounting controls for the
Fund's assets, including records of all securities transactions;
2) Daily calculation of the Fund's net asset value:
3) Accounting for dividends and interest received and distributions made;
4) Preparation and filing of the Fund's tax returns, Annual Report on Form
N-1R and Form N-1Q;
5) The production of transaction data, financial reports and such other
periodic and special reports as the Board of Trustees of the Fund may reasonably
request;
6) The preparation of financial statements for the annual report and other
shareholder communications;
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7) Liaison with the Fund's independent auditors; and
8) Monitoring and administration of arrangements with the Fund's custodian
and depository banks.
C. TRANSFER AGENT. The Fund hereby appoints Vanguard as Transfer Agent for
the Fund and Vanguard agrees to act in such capacity. In connection with such
appointment, Vanguard shall:
1) Maintain records showing for each Fund shareholder the following:
a) Name, address and tax identifying number (if applicable);
b) Number of Shares of the Fund held;
c) Historical information including dividends paid and date and price
of all transactions including individual purchases and redemptions; and
d) Any dividend reinvestment order, application, dividend address and
correspondence relating to the current maintenance of the account;
2) Record the issuance of Shares of the Fund Vanguard shall notify the Fund
in case any proposed issue of Shares by the Fund shall result in an over-issue
as defined by Section 8-104(2) of the Uniform Commercial Code and in case any
issue would result in such an over-issue, shall refuse to countersign and issue,
and/or credit, said Shares. Except as specifically agreed in writing between
Vanguard and the Fund, Vanguard shall have no obligation when countersigning and
issuing and/or crediting Shares, to take cognizance of any other laws relating
to the issue and sale of such Shares except insofar as policies and procedures
of the Stock Transfer Association recognize such laws.
3) Process all orders for the purchase of Shares in accordance with the
Fund's current registration statement. Upon receipt of any check or other
payment for purchase of Shares from an investor, drawn or endorsed to Vanguard,
it will (i) stamp the envelope with the date of receipt, (ii) forthwith process
the same for collection, (iii) determine the amounts thereof due the Fund, and
notify the Fund of such determination and deposit, such notification to be given
on a daily basis of the total amounts determined and deposited to said account
during such day. Amounts that are due the Fund will be withdrawn from the
account of Vanguard and transferred to the Fund's custodian bank. Vanguard shall
then credit the Share account of the investor with
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the number of Shares to be purchased according to the price of the Fund shares
in effect for purchases made on the date such payment is received by Vanguard,
as set forth in the Fund's I current prospectus and shall promptly mail a
confirmation of said purchase to the investor, all subject to any instructions
which the Fund may give to Vanguard with respect to the timing or manner of
acceptance of orders for Shares relating to payments so received by it.
4) Receive and stamp with the date of receipt all requests for redemptions
or repurchase of Shares held in certificate or non-certificate form, and shall
process said redemptions and repurchase requests as follows:
a) If such certificate, redemption or repurchase request complies with the
applicable standards approved by the Fund, Vanguard shall on each business day
notify the Fund of the total number of Shares presented and covered by such
requests received by Vanguard on such day;
b) On or prior to the seventh calendar day succeeding any such request for
redemption or repurchase, Vanguard shall notify the Custodian, subject to
instructions from the Fund, to transfer monies to such account as designated by
Vanguard for such payment to the redeeming shareholder of the applicable
redemption or repurchase price;
c) If any such certificate or request for redemption or repurchase does not
comply with applicable standards, Vanguard shall promptly notify the investor of
such fact, together with the reason therefore, and shall effect such redemption
or repurchase at the price next determined after receipt of documents complying
with said standards or, at such other time as the Fund shall so direct.
5) Acknowledge all correspondence from shareholders relating to their Share
accounts and undertake such other shareholder correspondence as may from time to
time be mutually agreed upon.
D. RECORDING OF TRANSFER. Vanguard is authorized to transfer, on the
records of the Fund maintained by it, Shares represented by certificates, as
well as issued Shares held in non-certificate form, upon the surrender to it of
the certificate or in the case of non-certificated Shares, comparable transfer
documents in proper form for transfer, and upon cancellation thereof to
countersign and issue new certificates or other document of ownership for a like
amount of Shares and to deliver the same pursuant to the transfer instructions.
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E. SHARE CERTIFICATES. The Fund authorizes Vanguard to procure and
safeguard a sufficient supply of continuous form blank Share certificates and
from time to time to renew such supply. Such blank Share certificates shall be
properly signed, manually or facsimile, as authorized by the Fund, and shall
bear the Fund's seal or facsimile thereof; and notwithstanding the death,
resignation or removal of any officers of the Fund authorized to sign Share
certificates, Vanguard may, until otherwise directed by the Fund, continue to
countersign certificates which bear the manual or facsimile signature of such
officer.
F. ISSUE OF SHARE CERTIFICATES. If a stockholder Qr officer of the Fund
requests a certificate representing Fund Shares, Vanguard as Transfer Agent,
will countersign and mail by first class mail, a Share certificate to the
investor at his address as set forth on the transfer books of the Fund.
G. RETURNED CHECKS. In the event that any check or other order for the
payment of money is returned unpaid for any reason, Vanguard will take such
steps, including redepositing said check for collection or returning xx.xx check
to the investor, as Vanguard may, in its discretion, deem appropriate, or as the
Fund may instruct.
H. DIVIDEND TAX REPORTING AND WITHHOLDING. Vanguard will prepare, file with
the Internal Revenue Service and mail to shareholders such returns for reporting
payment of dividends and distributions as are required by applicable laws to be
so filed and/or mailed and Vanguard shall withhold such sums as are required to
be withheld under applicable Federal income tax laws, rules and regulations.
I. PROXIES. Vanguard shall mail proxy statements, proxy cards and other
materials supplied to it by the Fund and shall receive, examine and tabulate
returned proxies. Vanguard shall make interim reports of the status of such
tabulation to the Fund upon request, and shall certify the final results of the
tabulation.
J. DIVIDEND DISBURSING. Vanguard shall act as Dividend and, as such, shall
prepare and mail checks or credit inccme and capital gain payments to
shareholders. The Fund shall advise Vanguard of the declaration of any dividend
or distribution and the record and payable date thereof at least five (5) days
prior to the record date. Vanguard shall, on or before the payment date of any
such dividend or distribution, notify the Fund's Custodian of the estimated
amount required to pay any portion of said dividend or distribution which is
payable in cash, and on or before the payment date of
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such distribution, the Fund,shall instruct its Custodian to make available to
Vanguard sufficient funds for the cash amount to be paid out. If a shareholder
is entitled to receive additional Shares by virtue of any such distribution or
dividend, appropriate credits will be made to his account and/or certificates
delivered where requested. A shareholder not electing issue of certificates will
receive a confirmation xxxx Vanguard indicating the number of Shares credited qo
his account as a result of the reinvested dividend or distribution.
K. OTHER INFORMATION. Vanguard will furnish to the Fund such other
information as l's required by law, including but not limited to shareholder
lists, and such statistical information as may be reasonably requested by the
Fund.
5 . SERVICES TO BE OBTAINED INDEPENDENTLY BY THE FUND
The Fund shall, at its own expense, provide for:
A. Services of an independent accountant;
B. Services of outside legal counsel (including such counsel's review of
the Fund's registration statement, proxy matierals and other reports and
materials prepared by Vanguard under this Agreement);
C. Any semices contracted for by the Fund directly from parties other than
Vanguard:
D. Trading operations and brokerage fees, commissions and transfer taxes,
if any, in connection with the purchase and sale of securities for its
investment portfolio;
E. Investment advisory services, if any:
F. Taxes, insurance premiums and other fees and expenses applicable to its
operation;
G. Costs incidental to any meetings of shareholders including, but not
limited to, legal and accounting fees, proxy filing fees and the preparation ,
printing and mailing of any proxy materials;
H. Costs incidental to Directors' meetings, including fees and expenses of
Directors;
I. Custodian and depository banks, and all services related thereto;
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J. All registration fees and filing fees required under the securities laws
of the United States and state regulatory authorities; and
K. Fidelity bond and Directors' and officers' liability insurance, or the
proportional share thereof if the Fund participates in the Vanguard Funds'
insurance coverage.
6 . PRICES, CHARGES AND INSTRUCTIONS
Vanguard will receive in consideration for the services provided and the
expenses assumed pursuant to this Agreement the out-of-pocket, incremental costs
incurred by Vanguard in connection with the providing of such services. Prior to
ordering any forms in such supply as it estimates will be adequate for more than
two years' use, Vanguard shall obtain the written consent of the Fund. At any
time Vanguard may apply to any officer of the Fund for instructions, and may
consult with legal counsel for the Fund, or its own outside legal counsel, at
the expense of the Fund, with respect to any matter arising in connection with
the services to be performed by Vanguard under this Agreement and Vanguard shall
not be liable and shall be indemnified by the Fund for any action taken or
omitted by it in good faith in reliance upon such instructions or upon the
opinion of such counsel. Vanguard shall be protected and indemnified in acting
upon any paper or document believed by it to be genuine and to have been signed
by the proper person or 'persons and shall not be held to have notice of any
change of authority of any person, until receipt of written notice thereof from
the Fund. Vanguard shall also be protected and indemnified, except where a stop
order is in effect, in recognizing stock certificates which Vanguard reasonably
believes to bear the proper manual or facsimile signature of the officers of the
Fund, and the proper counter-signatures of the transfer agent.
7 . LIMITATION OF LIABILITY AND INDEMNIFICATION
A. Vanguard shall be responsible for the performance of only such duties as
are set forth or contemplated herein or contained in instructions given to it
which are not contrary to this Agreement. Vanguard shall have no liability for
any loss or damage resulting from the performance or non-performance of its
duties hereunder unless solely caused by or resulting from the negligence or
willful misconduct of of Vanguard, its officers and employees.
B. The Fund shall indemnify and hold Vanguard harmless from all loss, cost,
damage and expense, including reasonable
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expenses for counsel, incurred by it resulting from any claim, demand, action,
or suit: (1) in connection with any action or omission by it in providing those
services to the Fund relating to the account functions specified in Subsections
1 and 3 of Section 3B of this agreement, Transfer Agency (as provided in Section
3E) and Dividend Disbursing (as provided in Section 3F); and (2) as a result of
acting upon any instructions reasonably believed by it to have been executed by
a duly authorized officer of the Fund or of the Fund's investment adviser. The
indemnification provided in this Section 6B does not extend to any loss,. cost,
damage or expense incurred by Vanguard as a result of any claim relating to the
valuation of the Fund's securities, determination of the Fund's net asset value,
or administration of the Fund, other than those services described in Section
4B1, 4B3, 4D, or 4L hereof.
C. The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above, but, if the
Fund elects to assume. the defense, such defense shall be conducted by counsel
chosen by the Fund. In the event the Fund elects to assume the defense of any
such suit and retain such counsel, Vanguard or any of its affiliated persons,
named as defendant or defendants in the suit, may retain additional counsel but
shall bear the fees and expenses of such counsel unless the Fund shall have
specifically authorized the retaining of such counsel.
D. No provision of this Agreement shall be deemed to protect Vanguard or
any of its directors, officers and/or employees , against liability to the Fund
or its shareholders to which id: might otherwise by subject by reason of any
fraud, willful misfeasance or gross negligence in the performance of its duties
or the reckless disregard of its obligations under this Agreement.
8 . CONFIDENTIALITY
Vanguard agrees that, except as otherwise required by law, Vanguard will
keep confidential all records and information in its possession relating to the
Fund or its shareholders or shareholder accounts and will not disclose the same
to any person except at the request or with the written consent of the Fund.
9 . COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
The Fund assumes full responsibility for complying with all applicable
requirements of the Securities Act of 1933, the Investment Company Act of 1940
and the Securities Exchange Act of 1934,
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all as amended, and any laws, rules and regulations of governmental authorities
having jurisdiction, except to the extent that Vanguard specifically assumes any
such obligations under the terms of this Agreement.
Vanguard shall maintain and preserve for the periods prescribed, such
records relating to the services to be performed by Vanguard under this
Agreement as are required pursuant to the Investment Company Act of 1940 and the
Securities Exchange Act of 1934. All such records shall at all times remain the
respective properties of the Fund, shall be readily accessible during normal
business hours to each, and shall be promptly surrendered upon the termination
of this Agreement or otherwise on written request. Records shall be surrendered
in usable machine readable form.
The terms of this Agreement are hereby made subject to the terms and
conditions of, or supporting the Application for, an exemptive Order of the
United States Securites and Exchange Commission under the Investment Company Act
of 1940 to which the Fund and Vanguard are parties.
10. STATUS OF VANGUARD
The services of Vanguard to the Fund are not to be deemed exclusive, and
Vanguard shall be free to render similar services to others. Vanguard shall be
deemed to be an independent contractor and shall, unless otherwise expressly
provided herein or authorized by the Fund from time to time, have no authority
to act or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
11. PRINTED MATTER CONCERNING THE FUND OR VANGUARD
Neither the Fund nor Vanguard shall publish and circulate any printed
matter which contains any reference to the other party without its prior written
approval, excepting such printed matter as refers in accurate terms to
Vanguard's appointment under this Agreement, the Distribution Agreement with
Vanguard Marketing Corporation, or the Licensing Agreement with the Vanguard
Funds.
12. TERM, AMENDMENT AND TERMINATION
This Agreement may be modified or amended from time to time by mutual
agreement between the parties hereto. The Agreement shall remain in effect for a
period of one year from the date first shown above, and shall automatically
continue in effect, thereafter unless terminated by either party at the end of
such period or thereafter on sixty (60) days' prior written notice.
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Upon termination of the Agreement, the Fund shall pay to Vanguard such
compensation as may be due under the terms hereof as of the date of such
termination.
13. NOTICES
Any notice or other canmunication authorized or required by this Agreement
to be given to any party mentioned herein shall be sufficiently given if
addressed to such party and mailed postage prepaid or delivered to it at its
offices at the address set forth below:
0000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Secretary
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by any of the parties hereto without
the prior consent in writing of the other party.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of the
Fund and Vanguard, and their respective successors.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the day and year above written.
ATTEST: VANGUARD SPECIAL RETIREMENT FUND
/S/ XXXXXXX X. XXXXXXXXX By /S/ XXXX X. XXXXX
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Secretary President and Chief Executive Officer
ATTEST: THE VANGUARD GROUP, INC.
/S/ XXXXXXX X. XXXXXXXXX By /S/ XXXX X. XXXXX
-------------------------- -----------------------------------
Secretary President and Chief Executive Officer
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