XX-00.XX
CUSTODY AGREEMENT
AGREEMENT, dated as of October 22, 1999 between each open-end management
investment company listed on Appendix A hereto as amended from time to time
(each such investment company, a "Fund") organized and existing under the laws
of the State of Delaware and registered with the U.S. Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "1940
Act"), on behalf of certain of their series (each such series, a "Series") and
The Bank of New York Company, Inc., a New York corporation authorized to do a
banking business ("Custodian"). The Funds' principal office and place of
business is X.X. Xxx 0000, Xxxxxx Xxxxx, XX 00000. The Custodian's principal
office and place of business is Xxx Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
WITNESSETH:
that for and in consideration of the mutual premises hereinafter set forth, each
Fund and Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the
meanings set forth below:
1. "AUTHORIZED PERSON" shall be any person duly authorized by a Fund's
Board of Trustees to execute any Certificate or to give Oral Instructions with
respect to one or more Accounts, such persons to be designated in a Certificate
annexed hereto as Appendix B or such other Certificate as may be received by
Custodian from time to time.
2. "AUTOFAX" shall mean an unsigned hard copy facsimile generated by a
Fund's computer system and transmitted to Custodian.
3. "BNY AFFILIATE" shall mean any office, branch or subsidiary of The Bank
of New York Company, Inc.
4. "BOOK-ENTRY SYSTEM" shall mean the Federal Reserve/Treasury book-entry
system for receiving and delivering securities, its successors and nominees.
5. "BUSINESS DAY" shall mean any day on which Custodian, Book-Entry System
and relevant Depositories are open for business.
6. "CERTIFICATE" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to Custodian,
which is actually received by Custodian by letter or facsimile transmission and
signed on behalf of a Fund by an Authorized Person of the Fund or a person
reasonably believed by Custodian to be an Authorized Person.
7. "DEPOSITORY" shall include the Book-Entry System, the Depository Trust
Company, the Participants Trust Company, and any other securities depository,
book-entry system or clearing agency (and their respective successors and
nominees) authorized to act as a securities depository, book-entry system or
clearing agency pursuant to applicable law and identified to a Fund.
8. "INSTRUCTIONS" shall mean communications and facsimiles transmitted by a
Fund by electronic or telecommunications media, including S.W.I.F.T.,
computer-to-computer interface, dedicated transmission lines, telex or Autofax,
none of which are manually signed by a representative of a Fund.
9. "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.
10. "SECURITIES" shall include, without limitation, any common stock and
other equity securities, bonds, debentures and other debt securities, notes,
mortgages or other obligations, and any instruments representing rights to
receive, purchase, or subscribe for the same, or representing
any other rights or interests therein (whether represented by a certificate or
held in a Depository or by a Subcustodian).
11. "SERIES" shall mean such of the various portfolios, if any, of a Fund,
as are listed on Appendix A hereto.
12. "SHARES" shall mean the shares of beneficial interest of a Fund, each
of which is, in the case of a Fund having Series, allocated to a particular
Series.
13. "SUBCUSTODIAN" shall mean a "bank" as defined in Section 2(a)(5) of the
1940 Act, which is identified to a Fund and which Custodian is required to use
to hold Securities purchased by a Fund from time to time.
ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS
1. (a) The Fund hereby appoints Custodian as custodian of all Securities
and cash at any time delivered to Custodian during the term of this Agreement,
and authorizes Custodian to hold Securities in registered form in its name or
the name of its nominees. Custodian hereby accepts such appointment and agrees
to establish and maintain one or more securities accounts and cash accounts for
each Series in which Custodian will hold Securities and cash as provided herein.
Custodian shall maintain books and records segregating the assets of each Series
from the assets of any other Series. Such accounts (each, an "Account";
collectively, the "Accounts") shall be in the name of the Series.
(b) Custodian may from time to time establish on its books and records such
sub-accounts within each Account as a Fund may reasonably request in a
Certificate or Instructions (each, a "Special Account") and Custodian shall find
reasonably acceptable, and shall reflect therein such assets as the Fund may
specify in a Certificate or Instructions.
(c) Custodian may from time to time establish pursuant to a written
agreement with and for the benefit of a broker, dealer, futures commission
merchant or other third party identified in a Certificate or Instructions such
accounts on such terms and conditions as a Fund may reasonably request and
Custodian shall find reasonably acceptable, and shall hold in such accounts such
Securities and cash as the Fund may specify in a Certificate or Instructions.
2. Except as otherwise provided by law, a cash account shall constitute one
single and indivisible current Account.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
1. Each Fund hereby represents and warrants, which representations and
warranties shall be continuing and shall be deemed to be reaffirmed upon each
delivery of a Certificate or each giving of Oral Instructions or Instructions by
such Fund, that
(a) It is duly organized and existing under the laws of the jurisdiction of
its organization, with full power to carry on its business as now conducted, to
enter into this Agreement and to perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered by such
Fund, approved by a resolution of its Board of Trustees, constitutes a valid and
legally binding obligation of such Fund, enforceable in accordance with its
terms, except as may be limited by bankruptcy, insolvency or other laws
affecting generally the enforceability of creditors' rights or by equitable
principles generally applied, and no statute, regulation or rule, applicable
solely to a Fund and not to Custodian, nor any order, judgment or contract
binding on such Fund prohibits such Fund's execution or performance of this
Agreement;
(c) It is conducting its business in substantial compliance with all
applicable laws and requirements, both state and federal, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as now conducted; there is no provision of its charter or by-laws, nor of any
mortgage, indenture, credit agreement or other contract binding on it or
affecting its property which would prohibit its execution or performance of this
Agreement;
(d) It will not use the services provided by Custodian hereunder in any
manner that is, or will result in, a violation of any law, rule or regulation
applicable solely to such Fund, and not to Custodian;
(e) It is fully informed of the protections and risks associated with
various methods of transmitting Instructions and Oral Instructions and
delivering Certificates to Custodian, understands that there may be more secure
methods of transmitting Instructions and Oral Instructions and delivering
Certificates than the methods selected by Custodian, agrees that the security
procedures (if any) to be utilized provide a commercially reasonable degree of
protection in light of its particular needs and circumstances, and will cause
each person transmitting Instructions to treat applicable user and authorization
codes, passwords and authentication keys with extreme care, and has established
internal control and safekeeping procedures to restrict the availability of the
same to persons duly authorized to give Instructions;
(f) It shall insure, and agrees it is solely its responsibility, that only
persons(s) duly authorized by such Fund transmit Instructions and agrees that
Custodian may presume that an Instruction including an Account number of a Fund
has been given by person(s) duly authorized to transmit Instructions and need
not review any Instruction other than an Autofax;
(g) It shall manage its borrowings, including, without limitation, any
advance or overdraft (including any day-light overdraft) in the Accounts, so
that the aggregate of its total borrowings for each Series does not exceed the
amount such Series is permitted to borrow under the 1940 Act;
(h) Its transmission or giving of Instructions pursuant to this Agreement
shall at all times comply with the 1940 Act;
(i) It shall only instruct Custodian, whether by a Certificate, Instruction
or Oral Instruction, to disburse cash (i) as hereinafter provided, (ii) for the
payment of dividends or distributions on, or redemptions of, Shares or (iii) for
other proper purposes;
(j) It shall impose and maintain limitations on the destinations to which
cash may be disbursed by Instructions to ensure that each disbursement is in
accordance with the immediately preceding representation and warranty; and
(k) It has the right to make the pledge and grant the security interest and
security entitlement to Custodian contained in paragraph 1 of Article VII
hereof, free of any right or prior claim of any other person or entity (except
as otherwise provided by law), such pledge and grants shall have a first
priority subject to no setoffs, counterclaims, or other liens or grants prior to
or on a parity therewith (except as otherwise provided by law).
2. Custodian hereby represents and warrants, which representations and
warranties shall be continuing and shall be deemed to be reaffirmed upon each
receipt of a Certificate or each receipt of Oral Instructions or Instructions by
the Custodian, that:
(a) It is duly organized and existing under the laws of the jurisdiction of
its organization, with full power to carry on its business as now conducted, to
enter into this Agreement and to perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered by
Custodian, constitutes a valid and legally binding obligation of Custodian,
enforceable in accordance with its terms, except as may be limited by
bankruptcy, insolvency or other laws affecting generally the enforceability of
creditors' rights or by equitable principles generally applied, and no statute,
regulation or rule, applicable solely to Custodian, and not to any Fund, nor any
order, judgment or contract binding on Custodian prohibits Custodian's execution
or performance of this Agreement;
(c) Custodian is conducting its business in substantial compliance with all
applicable laws and requirements, both state and federal, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as now conducted; there is no provision of its charter or by-laws, nor of any
mortgage, indenture, credit agreement or other contract binding on it or
affecting its property which would prohibit its execution or performance of this
Agreement;
(d) Custodian will not provide services hereunder in any manner that is, or
will result in, a violation of any law, rule or regulation applicable solely to
Custodian, and not to the Funds;
(e) Custodian will submit to the Funds on an annual basis a copy of its
report prepared in compliance with the requirements of Statement of Auditing
Standards No. 70 issued by the American Institute of Certified Public
Accountants, as it may be amended from time to time; and
(f) Custodian shall maintain, directly or through a third-party selected
with reasonable care, adequate back-up computer and communication lines.
ARTICLE IV
CUSTODY AND RELATED SERVICES
1. (a) Subject to the terms hereof, each Fund hereby authorizes Custodian
to hold any Securities received by it from time to time for such Fund's account.
Custodian shall be entitled to utilize Depositories to the extent possible in
connection with its performance hereunder, and Subcustodians as defined in
Article I of this Agreement. Securities and cash held in a Depository will be
held subject to the rules, terms and conditions of such entity. Securities and
cash held through Subcustodians shall be held subject to the terms and
conditions of Custodian's agreements with such Subcustodians. Subcustodians may
be authorized to hold Securities in Depositories in which such Subcustodians
participate. Unless otherwise required by local law or practice or a particular
subcustodian agreement, Securities deposited with Subcustodians will be held in
a commingled account in the name of Custodian as custodian for the Funds.
Custodian shall identify on its books and records the Securities and cash
belonging to each Fund and Series, whether held directly or indirectly through
Depositories or Subcustodians.
(b) Unless Custodian has received a Certificate or Instructions to the
contrary or applicable law or the rules of a particular Depository otherwise
require, Custodian shall hold Securities indirectly through a Subcustodian or a
Depository only if (i) the Securities are not subject to any right, charge,
security interest, lien or claim of any kind in favor of such Subcustodian or
such Depository or the creditors or operators of any of them, including a
receiver or trustee in bankruptcy or similar authority, except for a claim of
payment for the safe custody or administration of Securities or for funds
advanced on behalf of a Fund by such Subcustodian or Depository, and (ii)
beneficial ownership of the Securities is freely transferable without the
payment of cash or value other than for safe custody or administration.
2. Promptly after the close of business on each Business Day, Custodian
shall furnish each Fund with confirmations and a summary, on a per Series basis,
of all transfers to or from the Accounts, either hereunder or with any
Subcustodian appointed in accordance with this Agreement during said day. Where
Securities are transferred to an Account for a Series, Custodian shall also by
book-entry or otherwise identify as belonging to such Series a quantity of
Securities in a fungible bulk of Securities registered in the name of Custodian
(or its nominee) or shown on Custodian's account on the books of the Book-Entry
System or a Depository. At least monthly and from time to time, Custodian shall
furnish each Fund with a detailed statement, on a per Series basis, of the
Securities and cash held by Custodian for such Fund.
3. With respect to all Securities held hereunder, Custodian shall, unless
otherwise instructed to the contrary:
(a) Collect and receive all income, dividends, distributions and other
payments and promptly advise each Fund of any such amounts due but not paid;
(b) Give notice to each Fund and present payment and collect the amount
payable upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice of such call
appears in or is received from a nationally or internationally recognized bond
or corporate action service to which Custodian subscribes;
(c) Unless otherwise instructed by a Fund, Custodian shall retain in the
appropriate account any stock dividends, subscription rights and other non-cash
distributions on the Securities, or the proceeds from the sale of any
distributions. Custodian shall notify a Fund upon the receipt of any non-cash
item;
(d) Present for payment and collect the amount payable upon all Securities
which mature, promptly deposit or withdraw such proceeds as designated therein
and advise each Fund as promptly as practicable of any such amounts due but not
paid;
(e) Surrender Securities in temporary form for definitive Securities;
(f) Promptly forward to each Fund all notices, proxies, proxy soliciting
materials, consents and other written information (including, without
limitation, notices of tender offers and exchange offers, pendency of calls,
maturities of Securities and expiration of rights) relating to Securities held
pursuant to this Agreement which are actually received by the Custodian, but
without indicating the manner in which such proxies or consents are to be voted;
(g) Execute, as custodian, any certificates of ownership, affidavits,
declarations or other certificates under any tax laws now or hereafter in
effect;
(h) Hold directly or through the Book-Entry System or a Depository or
through a Subcustodian for the account of a Series, all rights and similar
Securities issued with respect to any Securities credited to an Account
hereunder; and
(i) Endorse for collection checks, drafts or other negotiable instruments.
4. (a) Whenever Securities (including, but not limited to, warrants,
options, tenders, options to tender or non-mandatory puts or calls) confer
optional rights on a Fund or provide for discretionary action or alternative
courses of action by a Fund, such Fund shall be responsible for making any
decisions relating thereto and for directing Custodian to act. In order for
Custodian to act, it must receive such Fund's Certificate or Instructions at
Custodian's offices, addressed as Custodian may from time to time request, not
later than noon (New York time) at least two (2) Business Days prior to the last
scheduled date to act with respect to such Securities (or such earlier date or
time as Custodian may notify such Fund). Absent Custodian's timely receipt of
such Certificate or Instructions, Custodian shall not be liable for failure to
take any action relating to or to exercise any rights conferred by such
Securities, unless Custodian has failed to act under sub-paragraph (b) of this
paragraph 4 and such failure constitutes negligence, bad faith or willful
misconduct.
(b) Custodian shall notify each Fund of such rights or discretionary
actions or of the date or dates by when such rights must be exercised or such
action must be taken provided that Custodian has actually received, from the
issuer or the relevant Depository (with respect to Securities issued in the
United States) or from the relevant Subcustodian, Depository or from a
nationally or internationally recognized bond or corporate action service to
which Custodian subscribes, timely notice of such rights or discretionary
corporate action or of the date or dates such rights must be exercised or such
action must be taken. Absent actual receipt of such notice, Custodian shall have
no liability for failing to so notify a Fund.
5. Upon receipt of a Certificate and not otherwise, the Custodian, directly
or through the use of the Book-Entry System or a Depository shall:
(a) Execute and deliver to such persons as may be designated in a
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of a Fund as owner of any Securities held by the Custodian
hereunder for the Series specified in the Certificate may be exercised;
(b) Deliver any Securities held by the Custodian hereunder for the Series
specified in such Certificate in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization, refinancing, merger,
consolidation or recapitalization of any corporation, or the exercise of any
conversion privilege and receive and hold hereunder specifically allocated to
such Series any cash or other Securities received in exchange;
(c) Deliver any Securities held by the Custodian hereunder for the Series
specified in such Certificate to any protective committee, reorganization
committee or other person in connection with the reorganization, refinancing,
merger, consolidation, recapitalization or sale of assets of any corporation,
and receive and hold hereunder specifically allocated to such Series such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
(d) Make such transfers or exchanges of the assets of the Series specified
in such Certificate, and take such other steps as shall be stated in such
Certificate to be for the purpose of effectuating any duly authorized plan of
liquidation, reorganization, merger, consolidation or recapitalization of a
Fund; and
(e) Present for payment and collect the amount payable upon Securities not
described elsewhere in this Agreement which may be called as specified in the
Certificate.
6. All voting rights with respect to Securities, however registered, shall
be exercised by a Fund or its designee. For Securities issued in the United
States, Custodian's only duty shall be to mail to the Funds any documents
(including proxy statements, annual reports and signed proxies) actually
received by Custodian relating to the exercise of such voting rights. With
respect to Securities issued outside of the United States, Custodian's only duty
shall be to provide the appropriate Fund with access to a provider of global
proxy services at such Fund's request. The Fund shall be responsible for all
costs associated with its use of such services.
7. Custodian shall promptly advise a Fund upon Custodian's actual receipt
of notification of the partial redemption, partial payment or other action
affecting less than all Securities of the relevant class. If Custodian, any
Subcustodian, or any Depository holds any Securities in which a Fund has an
interest as part of a fungible mass, Custodian, such Subcustodian or Depository
may select the Securities to participate in such partial redemption, partial
payment or other action in any non-discriminatory manner that it customarily
uses to make such selection.
8. Custodian shall not under any circumstances accept bearer interest
coupons which have been stripped from United States federal, state or local
government or agency securities unless explicitly agreed to by Custodian in
writing.
9. Each Fund shall be liable for all taxes, assessments, duties and other
governmental charges, including any interest or penalty thereto, with respect to
any cash or Securities held on behalf of such Fund or any transaction related
thereto.
ARTICLE V
SETTLEMENT OF SECURITIES TRANSACTIONS
1. For the purpose of settling Securities and transactions, a Fund shall
provide Custodian with sufficient immediately available funds for all
transactions by such time and date as conditions in the relevant market dictate.
As used herein, "sufficient immediately available funds" shall mean sufficient
cash. Custodian shall provide each Fund with immediately available funds each
day which result from the actual settlement of all sale transactions, based upon
advices received by Custodian from its Subcustodians and Depositories. Such
funds shall be in U.S. dollars.
ARTICLE VI
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
1. Promptly after each purchase or sale of Securities by a Fund, such Fund
shall deliver to Custodian a Certificate or Instructions, or with respect to a
purchase or sale of a Security generally required to be settled on the same day
the purchase or sale is made, Oral Instructions, specifying all information
Custodian may reasonably request to settle such purchase or sale. Custodian
shall account for all purchases and sales of Securities on the actual settlement
date unless otherwise agreed by Custodian.
2. Each Fund understands that when Custodian is instructed to deliver
Securities against payment, delivery of such Securities and receipt of payment
therefor may not be completed simultaneously. Notwithstanding any provision in
this Agreement to the contrary, settlements, payments and deliveries of
Securities may be effected by Custodian or any Subcustodian in accordance with
the customary or established securities trading or securities processing
practices and procedures in the jurisdiction in which the transaction occurs,
including, without limitations, delivery to a purchaser or dealer therefor (or
agent) against receipt with the expectation of receiving later payment for such
Securities. Each Fund assumes full responsibility for all risks, including,
without limitation, credit risks, involved in connection with such delivery of
Securities by Custodian, except the foregoing shall not excuse Custodian's
acting in accordance with such practices or procedures in a manner which
constitutes negligence, bad faith or willful misconduct.
3. Custodian may, as a matter of bookkeeping convenience or by separate
agreement with a Fund, credit the Account with the proceeds from the sale,
redemption or other disposition of Securities or interest, dividends or other
distributions payable on Securities prior to its actual receipt of final payment
therefor. All such credits shall be conditional until Custodian's actual receipt
of final payment and may be reversed by Custodian to the extent that final
payment is not received. Custodian shall notify the appropriate Fund at least 48
hours prior to any such reversal,
but such reversal shall be made as of the date Custodian determines it has not
received final payment. Payment with respect to a transaction will not be
"final" until Custodian shall have received immediately available funds which
under applicable local law, rule and/or practice are irreversible and not
subject to any security interest, levy or other encumbrance, and which are
specifically applicable to such transaction.
ARTICLE VII
OVERDRAFTS OR INDEBTEDNESS
1. If Custodian should in its sole discretion advance funds on behalf of
any Series which results in an overdraft (including, without any limitations,
any day-light overdraft) because the cash held by Custodian in an Account for
such Series shall be insufficient to pay the total amount payable upon the
purchase of Securities specifically allocated to such Series, as set forth in a
Certificate, Instructions or Oral Instructions, or if an overdraft arises in the
separate Account of a Series for some other reason, including, without
limitation, because of a reversal of a conditional credit, Custodian shall
promptly notify the appropriate Fund of any such advance and the time at which
such advance or overdraft must be paid. Such advance, overdraft or indebtedness
shall be deemed to be a loan made by Custodian to such Fund for such Series
payable on demand and shall bear interest from the date incurred at a rate per
annum agreed by such Fund and Custodian from time to time, or, in the absence of
an agreement, at the rate ordinarily charged by Custodian to its institutional
customers. In addition, each Fund hereby agrees that Custodian shall, to the
maximum extent permitted by law, have a continuing lien, security interest and
security entitlement in and to such Securities of such Series as shall from time
to time have a fair market value equal to the aggregate amount of all overdrafts
of, and advances to, such Series, together with accrued interest, such lien,
security interest and security entitlement to be effective only as long as such
advance, overdraft, or accrued interest thereon remains outstanding. Each Fund
authorizes Custodian to charge any such overdraft or indebtedness, together with
interest due thereon, against any balance of account standing to such Series'
credit on Custodian's books.
ARTICLE VIII
SALE AND REDEMPTION OF SHARES
1. Whenever a Fund shall sell any Shares, it shall deliver to Custodian a
Certificate, Oral Instructions, or Instructions specifying the amount of cash to
be received by Custodian for the sale of such Shares and specifically allocated
to an Account for such Series.
2. Upon receipt of such cash from such Fund's transfer agent, Custodian
shall credit such cash to the Account in the name of the Series for which such
cash was received.
3. Except as provided hereinafter, whenever a Fund desires Custodian to
make payment out of the cash held by Custodian hereunder in connection with a
redemption of any Shares, it shall furnish to Custodian a Certificate, Oral
Instructions, or Instructions specifying the amount to be paid for such Shares,
and Custodian shall make payment to the transfer agent out of the cash held in
the Account of the Series the total amount specified in such Certificate, Oral
Instructions, or Instructions.
4. Notwithstanding the above provisions regarding the redemption of any
Shares, whenever any Shares are redeemed pursuant to any check redemption
privilege which may from time to time be offered by a Fund, Custodian, unless
otherwise instructed by a Certificate, Oral Instructions or Instructions, shall,
upon request of such Fund's transfer agent, charge the amount thereof against
the cash held in the Account of the Series of the Shares being redeemed.
ARTICLE IX
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. Each Fund shall furnish to Custodian a Certificate, Oral Instructions,
or Instructions setting forth with respect to the Series specified therein the
date of the declaration of a dividend or distribution, the total amount payable
and the payable date.
2. Upon the payment date specified in such Certificate, Oral Instructions
or Instructions, Custodian shall pay out of the cash held for the account of
each Series the total amount payable to
the dividend agent and any sub-dividend agent or co-dividend agent of the
appropriate Fund with respect to such Series specified therein.
ARTICLE X
CONCERNING CUSTODIAN
1. (a) Except as otherwise expressly provided herein, Custodian shall not
be liable for any costs, expenses, damages, liabilities or claims, including
attorneys' and accountants' fees (collectively, "Losses"), incurred by or
asserted against a Fund, except those Losses arising out of the negligence, bad
faith or willful misconduct of Custodian.
(b) With respect to any Losses incurred by a Fund as a result of the acts
or the failure to act by any Depository or any Subcustodian (other than a BNY
Affiliate), Custodian shall take appropriate action to recover such Losses from
such Depository or such Subcustodian; and Custodian's sole responsibility and
liability to such Fund shall be limited to amounts so received from such
Depository or such Subcustodian (exclusive of costs and expenses incurred by
Custodian), except to the extent that (A) any such Subcustodian is a parent,
subsidiary or otherwise affiliated with Custodian, (B) Custodian's negligence,
bad faith or willful misconduct is the direct cause of such Depository or such
Subcustodian's act or omission (it being agreed that Custodian's decision to use
any Subcustodian or any Depository shall not constitute negligence, bad faith,
or willful misconduct), or (C) a transaction or other matter between Custodian
and such Depository or such Subcustodian unrelated to the Funds was the cause of
the loss or damage, in each of which events, Custodian shall be liable for such
Losses.
(c) Custodian shall not be liable to a Fund or any third party for special,
indirect or consequential damages, or lost profits or loss of business, arising
in connection with this Agreement, nor shall BNY or any Subcustodian be liable:
(i) for acting in accordance with any Certificate or Oral Instructions from a
Fund, or any Authorized Person of a Fund, or any Instructions; (ii) for the acts
or omissions of its nominees, correspondents, agents (other than as specified
herein), any brokers or dealers, except to the extent that (A) any such nominee,
correspondent, agent, broker or dealer is a parent, subsidiary or otherwise
affiliated with Custodian, (B) Custodian's negligence, bad faith or willful
misconduct is the direct cause of such nominee's, correspondent's, agent's,
broker's or dealer's act or omission or (C) a transaction or other matter
between Custodian and such nominee, correspondent, agent, broker or dealer
unrelated to the Funds was the cause of the loss or damage, in each of which
events, Custodian shall be liable; (iii) for holding property in any particular
country, including, but not limited to, Losses resulting from nationalization,
expropriation or other governmental actions; regulation of the banking or
securities industry; availability of cash or Securities or market conditions
which prevent the transfer of property or execution of Securities transactions
or affect the value of property; or (iv) for any Losses due to forces beyond the
control of Custodian, including without limitation strikes, work stoppages, acts
of war or terrorism, insurrection, revolution, nuclear or natural catastrophes
or acts of God, or interruptions, loss or malfunctions of utilities,
communications or computer (hardware and software) services caused by any of the
foregoing, or the insolvency of any Subcustodian or of any Depository. Custodian
shall endeavor to promptly notify the Funds when it becomes aware of any
situation outlined above, but shall not be liable for a failure to do so. The
Funds shall not be responsible for temporary delays in the performance of their
duties and obligations hereunder and correspondingly shall not be liable for any
Losses attributable to such delay in consequence of an event as described above
affecting the Funds' principal place of business operations or administration.
For the avoidance of doubt, Custodian shall have no liability for any Losses
arising from the applicability of any law or regulation now or hereafter in
effect, or from the occurrence of any event, which may affect, limit or prevent
the transferability or availability of any cash in the countries in which such
cash is held, except that the foregoing shall not excuse Custodian's acting or
not acting in accordance with any Certificate, Oral Instructions, or
Instructions in a manner which constitutes negligence, bad-faith, or willful
misconduct.
(d) Custodian may enter into subcontracts, agreements and understandings
with any BNY Affiliate, whenever and on such terms and conditions as it deems
necessary or appropriate to perform its services hereunder. No such subcontract,
agreement or understanding shall discharge Custodian from its obligations and
liabilities hereunder.
(e) Each Fund agrees to indemnify Custodian against and hold Custodian
harmless from any and all Losses sustained or incurred because of or in
connection with this Agreement, including reasonable fees and expenses of
counsel incurred by Custodian in a successful defense of claims by such Fund;
provided, however, that the Funds shall not indemnify Custodian for those Losses
-------- -------
arising out of Custodian's negligence, bad faith or willful misconduct. This
indemnity shall be a continuing obligation of each Fund, its respective
successors and assigns, notwithstanding the termination of this Agreement.
(f) Custodian agrees to indemnify each Fund against and hold each Fund
harmless from any and all Losses sustained or incurred because of or in
connection with this Agreement, including reasonable fees and expenses of
counsel incurred by the Funds in a successful defense of claims by Custodian,
provided, however, that Custodian shall only indemnify the Funds for those
-------- -------
Losses arising out of Custodian's negligence, bad faith or willful misconduct,
and provided further, that Custodian shall not be liable to any Fund for
-------- -------
special, indirect or consequential damages, lost profits or loss of business.
This indemnity shall be a continuing obligation of Custodian, its successors and
assigns, notwithstanding the termination of this Agreement.
2. Without limiting the generality of the foregoing, Custodian shall be
under no obligation to inquire into, and shall not be liable (except to the
extent that either of (a) or (b) involves Custodian's negligence, bad faith or
willful misconduct) for:
(a) Any Losses incurred by a Fund or any other person as a result of the
receipt or acceptance of fraudulent, forged or invalid Securities, or Securities
which are otherwise not freely transferable or deliverable without encumbrance
in any relevant market;
(b) The validity of the issue of any Securities purchased or sold by or for
a Fund;
(c) The legality of the purchase, sale or writing of Securities by or for a
Fund, or the propriety of the amount paid or received therefor;
(d) The legality of the sale or redemption of any Shares, or the propriety
of the amount to be received or paid therefor;
(e) The legality of the declaration or payment of any dividend by a Fund;
(f) The legality of any borrowing by a Fund using Securities as collateral;
(g) The legality of any loan of portfolio Securities, nor shall Custodian
be under any duty or obligation to see to it that any cash collateral delivered
to it by a broker, dealer, or financial institution or held by it at any time as
a result of such loan of portfolio Securities of a Fund is adequate collateral
for such Fund against any loss it might sustain as a result of such loan.
Custodian specifically, but not by way of limitation, shall not be under any
duty or obligation periodically to check or notify a Fund that the amount of
such cash collateral held by it for such Fund is sufficient collateral for such
Fund, but such duty or obligation shall be the sole responsibility of such Fund.
In addition, Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of a Fund
are lent makes payment to it of any dividends or interest which are payable to
or for the account of such Fund during the period of such loan or at the
termination of such loan, provided, however that Custodian shall promptly notify
such Fund in the event that such dividends or interest are not paid and received
when due;
(h) The sufficiency or value of any amounts of cash and/or Securities held
in any Special Account in connection with transactions by a Fund; whether any
broker, dealer, futures commission merchant or clearing member makes payment to
a Fund of any variation margin payment or similar payment which such Fund may be
entitled to receive from such broker, dealer, futures commission merchant or
clearing member, or whether any payment received by Custodian from any broker,
dealer, futures commission merchant or clearing member is the amount a Fund is
entitled to receive, or to notify such Fund of Custodian's receipt or
non-receipt of any such payment; or
(i) Whether any Securities at any time delivered to, or held by it or by
any Subcustodian, for the account of a Fund and specifically allocated to a
Series are such as properly may be held by such Fund or such Series under the
provisions of its then current prospectus and statement of additional
information or (b) to ascertain whether any transactions by a Fund, whether or
not involving the Custodian, are such transactions as may properly be engaged in
by such Fund.
3. Custodian may, with respect to questions of law specifically regarding
an Account, obtain the advice of counsel and shall be fully protected with
respect to anything done or omitted by it in good faith in conformity with such
advice.
4. Custodian shall be under no obligation to take action to collect any
amount payable on Securities in default, or if payment is refused after due
demand and presentment, unless and until (i) it shall be directed to take such
action by a Certificate or Instructions and (ii) it shall be assured to its
satisfaction of reimbursement of its reasonable costs and expenses in connection
with any such action.
5. Custodian shall have no duty or responsibility to inquire into, make
recommendations, supervise, or determine the suitability of any transactions
affecting any Account.
6. The Funds shall pay to Custodian the fees and charges as may be
specifically agreed upon from time to time and such other fees and charges at
agreed rates for such services as may be applicable.
7. Custodian has the right to debit a cash Account (or any subaccount
thereof) as agreed upon by Custodian and each Fund in advance for any amount
payable by a Fund in connection with any and all obligations of such Fund to
Custodian.
8. Custodian shall be entitled to rely upon any Certificate or Oral
Instructions actually received by Custodian and reasonably believed by Custodian
to be duly authorized and delivered by an Authorized Person. Each Fund agrees to
forward to Custodian a Certificate or Instructions confirming Oral Instructions
by the close of business of the same day that such Oral Instructions are given
to Custodian. Each Fund agrees that the fact that such confirming Certificate or
Instructions are not received or that a contrary Certificate or contrary
Instructions are received by Custodian shall in no way affect the validity or
enforceability of transactions authorized by such Oral Instructions and effected
by Custodian and under either of the two foregoing circumstances, Custodian
shall promptly notify the Funds. If a Fund elects to transmit Instructions
through an on-line communications system offered by Custodian, such Fund's use
thereof shall be subject to the Terms and Conditions attached hereto as Appendix
I.
9. The books and records pertaining to a Fund which are in possession of
Custodian shall be the property of such Fund. Such books and records shall be
prepared and maintained as required by the 1940 Act and the rules thereunder and
other applicable securities laws and rules and regulations. Such Fund, or such
Fund's authorized representatives, shall have access to such books and records
during Custodian's normal business hours. Upon the reasonable request of a Fund,
copies of any such books and records shall be provided by Custodian to such Fund
or such Fund's authorized representative free of charge. Upon the reasonable
request of a Fund, Custodian shall provide in hard copy or on computer disc, any
records included in any such delivery which are maintained by Custodian on a
computer disc, or are similarly maintained.
10. It is understood that Custodian is authorized to supply any information
regarding the Accounts which is required by any law, regulation or rule now or
hereafter in effect. The Custodian shall provide each Fund with any report
obtained by the Custodian on the system of internal accounting control of a
Depository or OCC, and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
11. Neither Custodian nor any Fund shall have any duties or
responsibilities whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement.
ARTICLE XI
TERMINATION
Either party may terminate this Agreement by giving to the other party a
notice in writing specifying the date of such termination, which shall be not
less than ninety (90) days after the date of such notice. In the event such
notice is given by a Fund, it shall be accompanied by a copy of the resolution
of the Board of Trustees of such Fund, certified by the Secretary or any
Assistant Secretary, electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall be a bank or trust
company having not less than $2,000,000 aggregate capital, surplus and undivided
profits. In the event such notice is given by Custodian, the Fund shall, on or
before the termination date, deliver to Custodian a copy of a resolution of the
Boards of Trustees of the Fund, certified by the Secretary or any Assistant
Secretary, designating a successor custodian or custodians. In the absence of
such designation by the Fund, Custodian shall designate a successor custodian
which shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits, and which shall be satisfactory to the
Funds. Upon the date set forth in such notice, this Agreement shall terminate
with respect to the affected Fund(s), and the Custodian shall upon receipt of a
notice of acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and cash then owned by the Fund(s) and
held by it as custodian, after deducting all agreed upon fees, expenses and
other amounts for the payment of reimbursement of which it shall then be
entitled.
If a successor custodian is not designated by the Fund or Custodian in
accordance with the preceding paragraph, the Fund shall upon the date specified
in the notice of termination of this Agreement and upon the delivery by
Custodian of all Securities (other than Securities which cannot be delivered to
the Fund) and cash then owned by the Fund be deemed to be its own custodian and
Custodian shall thereby be relieved of all duties and responsibilities pursuant
to this Agreement, other than the duty with respect to Securities which cannot
be delivered to the Fund to hold such Securities hereunder in accordance with
this Agreement.
ARTICLE XII
MISCELLANEOUS
1. Each Fund agrees to furnish to Custodian a new Certificate of Authorized
Persons in the event of any change in the then present Authorized Persons. Until
such new Certificate is received, Custodian shall be fully protected in acting
upon Certificates or Oral Instructions of such present Authorized Persons.
2. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to Custodian, shall be sufficiently given if
addressed to Custodian and received by it at its offices at Xxx Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, or at such other place as Custodian may from time to time
designate in writing.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to a Fund shall be sufficiently given if addressed to
the Fund and received by it at its offices at X.X. Xxx 0000, Xxxxxx Xxxxx, XX
00000, Attn.: Controller, or at such other place as the Fund may from time to
time designate in writing.
4. Each and every right granted to either party hereunder or under any
other document delivered hereunder or in connection herewith, or allowed it by
law or equity, shall be cumulative and may be exercised from time to time. No
failure on the part of any party to exercise, and no delay in exercising, any
right will operate as a waiver thereof, nor will any single or partial exercise
by either party of any right preclude any other or future exercise thereof or
the exercise of any other right.
5. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
thereby. This Agreement, other than the Appendix B hereto, may not be amended or
modified in any manner except by a written agreement executed by both parties.
This Agreement shall extend to and shall be binding upon the parties hereto, and
their respective successors and assigns; provided, however, that this Agreement
-------- -------
shall not be assignable by either party without the written consent of the
other.
6. This Agreement shall be construed in accordance with the substantive
laws of the State of New York, without regard to conflicts of laws principles
thereof. Each Fund and Custodian hereby consent to the jurisdiction of a federal
court situated in New York City, New York in connection with any dispute arising
hereunder. Each Fund hereby irrevocably waives, to the fullest extent permitted
by applicable law, any objection which it may now or hereafter have to the
laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. Each Fund and Custodian hereby each irrevocably waives any and all rights
to trial by jury in any legal proceeding arising out of or relating to this
Agreement.
7. Notwithstanding the fact that Custodian may from time to time maintain
an Account in the name of a third party, the parties hereto agree that in
performing hereunder, Custodian is acting
solely on behalf of the Funds and no contractual or service relationship shall
be deemed to be established hereby between Custodian and any such third party or
any other person.
8. This Agreement is executed on behalf of the Board of Trustees of each
Fund as Trustees and not individually and the obligations of this Agreement are
not binding upon any of the Trustees or shareholders individually but are
binding only upon the assets and property of such Funds; further, the assets of
a particular Series of such Fund shall under no circumstances be charged with
liabilities attributable to any other Series of such Fund and that all persons
extending credit to, or contracting with or having any claim against a
particular Series of such Fund shall look only to the assets of that particular
Series for payment of such credit, contract or claim.
9. The parties hereto agree that each shall treat confidentially the terms
and conditions of this Agreement and all information provided by each party to
the other regarding its business and operations. All confidential information
provided by a party hereto shall be used by any other party hereto solely for
the purpose of rendering or obtaining services pursuant to this Agreement and,
except as may be required in carrying out this Agreement, shall not be disclosed
to any third party without the prior consent of such providing party. The
foregoing shall not be applicable to any information that is publicly available
when provided or thereafter becomes publicly available other than through a
breach of this Agreement, or that is required to be disclosed by or to any
regulatory authority, any external or internal accountant, auditor or counsels
of the parties hereto, by judicial or administration process or otherwise by
applicable law, or to any disclosure made by a party if such party's counsel has
advised that such party could be liable under any applicable law or any judicial
or administrative order or process for a failure to make such disclosure.
10. This Agreement 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.
IN WITNESS WHEREOF, each Fund and Custodian have caused this Agreement to
be executed by their respective officers, thereunto duly authorized, as of the
day and year first above written.
Each Fund Listed on Appendix A
________________________________
By:_____________________________
Title:__________________________
THE BANK OF NEW YORK COMPANY, INC.
By:______________________________
Title:___________________________
APPENDIX I
THE BANK OF NEW YORK
ON-LINE COMMUNICATIONS SYSTEM (THE "SYSTEM")
TERMS AND CONDITIONS
1. License; Use. Upon delivery to the Funds of software enabling the Funds
-------------
to obtain access to the System (the "Software"), Custodian grants to each Fund a
personal, nontransferable and nonexclusive license to use the Software solely
for the purpose of transmitting Instructions, receiving reports, making
inquiries or otherwise communicating with Custodian in connection with the
Account(s). Each Fund shall use the Software solely for its own internal and
proper business purposes and not in the operation of a service bureau. Except as
set forth herein, no license or right of any kind is granted to a Fund with
respect to the Software. Each Fund acknowledges that Custodian and its suppliers
retain and have title and exclusive proprietary rights to the Software,
including any trade secrets or other ideas, concepts, know-how, methodologies or
information incorporated therein and the exclusive rights to any copyrights,
trademarks and patents (including registrations and applications for
registration of either), or other statutory or legal protections available in
respect thereof. Each Fund further acknowledges that all or a part of the
Software may be copyrighted or trademarked (or a registration or claim made
therefor) by Custodian or its suppliers. No Fund shall take any action with
respect to the Software inconsistent with the foregoing acknowledgements, nor
shall any Fund attempt to decompile, reverse engineer or modify the Software. No
Fund may copy, sell, lease or provide, directly or indirectly, any of the
Software or any portion thereof to any other person or entity without
Custodian's prior written consent. No Fund may remove any statutory copyright
notice or other notice included in the Software or on any media containing the
Software. Each Fund shall reproduce any such notice on any reproduction of the
Software and shall add statutory copyright notice or other notice to the
Software or media upon Custodian's request. Custodian agrees to provide
reasonable training, instruction manuals and access to Custodian's "help desk"
in connection with each Fund's user support necessary to use the Software. At a
Fund's request, Custodian agrees to permit reasonable testing of the Software by
any Fund.
2. Proprietary Information. The Software, any data base (other than
------------------------
databases relating solely to the assets of a Fund and transactions with respect
thereto) and any proprietary data, processes, information and documentation made
available to the Fund (other than which are or become part of the public domain
or are legally required to be made available to the public) (collectively, the
"Information"), are the exclusive and confidential property of Custodian or its
suppliers. The Fund shall keep the Information confidential by using the same
care and discretion that the Fund uses with respect to its own confidential
property and trade secrets, but not less than reasonable care. Upon termination
of the Agreement or the Software license granted herein for any reason, the Fund
shall return to Custodian any and all copies of the Information which are in its
possession or under its control.
3. Indemnification. Custodian will indemnify and hold harmless the Funds
---------------
with respect to any liability, damages, loss or claim incurred by or brought
against any Fund by reason of any claim or infringement against any patent,
copyright, license or other property right arising out or by reason of a Fund's
use of the Software in the form provided under this Appendix. Custodian at its
own expense will defend such action or claim brought against a Fund to the
extent that it is based on a claim that the Software in the form provided by
Custodian infringes any patents, copyrights, license or other property right,
provided that Custodian is provided with reasonable notice of such claim,
provided that the Fund has not settled, compromised or confessed any such claim
without the Custodian's written consent, in which event Custodian shall have no
liability or obligation hereunder, and provided Fund cooperates with and assists
Custodian in the defense of such claim. Custodian shall have the right to
control the defense of all such claims, lawsuits and other proceedings. If, as a
result of any claim of infringement against any patent, copyright, license or
other property right, Custodian is enjoined from using the Software, or if
Custodian believes that the System is likely to become the subject of a claim of
infringement, Custodian may in its sole discretion either (a) at its expense
procure the right for the Funds to continue to use the Software, or
(b) replace or modify the Software so as to make it non-infringing, or (c) may
discontinue the license granted herein upon written notice to the Funds.
4. Modifications. Custodian reserves the right to modify the Software at
-------------
its own expense from time to time and a Fund shall install new releases of the
Software as Custodian may direct. Each Fund agrees not to modify or attempt to
modify the Software without Custodian's prior written consent. Each Fund
acknowledges that any modifications to the Software, whether by a Fund or
Custodian and whether with or without Custodian's consent, shall become the
property of Custodian.
5. NO REPRESENTATIONS OR WARRANTIES. CUSTODIAN AND ITS MANUFACTURERS AND
----------------------------------
SUPPLIERS MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE SOFTWARE,
SERVICES OR ANY DATABASE, EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING BUT
NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. EACH FUND ACKNOWLEDGES THAT THE SOFTWARE, SERVICES AND ANY DATABASE ARE
PROVIDED "AS IS." IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ANY
DAMAGES, WHETHER DIRECT, INDIRECT, SPECIAL OR CONSEQUENTIAL, WHICH A FUND MAY
INCUR IN CONNECTION WITH THE SOFTWARE, SERVICES OR ANY DATABASE, EVEN IF
CUSTODIAN OR SUCH SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE
OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF
COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR
CAUSE BEYOND THEIR REASONABLE CONTROL.
6. Security; Reliance; Unauthorized Use. Each Fund will cause all persons
--------------------------------------
utilizing the Software and System to treat all applicable user and authorization
codes, passwords and authentication keys with extreme care. Custodian is hereby
irrevocably authorized to act in accordance with and rely on Instructions
received by it through the System. Each Fund acknowledges that it is its sole
responsibility to assure that only persons duly authorized by such Fund use the
System and that Custodian shall not be responsible or liable for any
unauthorized use thereof.
7. System Acknowledgements. Custodian shall acknowledge through the System
-----------------------
its receipt of each transmission communicated through the System, and in the
absence of such acknowledgement Custodian shall not be liable for any failure to
act in accordance with such transmission and the Fund may not claim that such
transmission was received by Custodian.
8. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY UNITED
--------------------
STATES LAW. THE FUNDS MAY NOT UNDER ANY CIRCUMSTANCES RESELL, DIVERT, TRANSFER,
TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY FORM) IN OR TO ANY OTHER
COUNTRY. IF CUSTODIAN DELIVERED THE SOFTWARE TO THE FUND OUTSIDE OF THE UNITED
STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN ACCORDANCE WITH THE
EXPORTER ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO U.S. LAW IS
PROHIBITED. Each Fund hereby authorizes Custodian to report its name and address
to government agencies to which Custodian is required to provide such
information by law.
9. ENCRYPTION. Each Fund acknowledges and agrees that encryption may not be
----------
available for every communication through the System, or for all data. Each Fund
agrees that Custodian may deactivate any encryption features at any time,
without prior or contemporaneous notice, or liability, to such Fund, for the
purpose of repairing or troubleshooting the System or the Software. Custodian
shall promptly advise each Fund whenever Custodian has deactivated any
encryption features. Custodian also may deactivate any encryption features,
without liability to a Fund, for the purpose of scheduled maintenance, so long
as it provides reasonable advance notice to the Fund.
APPENDIX A
FUND: Vanguard Admiral Funds
SERIES/TAX IDENTIFICATION NO.: Vanguard Admiral Treasury Money Market
Fund/00-0000000
FUND: Vanguard Money Market Reserves
SERIES/TAX IDENTIFICATION NO.: Vanguard Prime Money Market Fund/00-0000000
Vanguard Federal Money Market Fund/00-0000000
FUND: Vanguard Treasury Fund
SERIES/TAX IDENTIFICATION NO.: Vanguard Treasury Money Market Fund/00-0000000
FUND: Vanguard Variable Insurance Funds
SERIES/TAX IDENTIFICATION NO.: Money Market Portfolio/00-0000000
