THE VANGUARD GROUP, INC. DEFINED CONTRIBUTION CLEARANCE & SETTLEMENT AGREEMENT (VVIF-ONLY)

 

Item 26. Exhibit h. i. g. 2.

 

NSCC Membership Number : 4534_

 

THE VANGUARD GROUP, INC.

 

DEFINED CONTRIBUTION CLEARANCE & SETTLEMENT

AGREEMENT

 

(VVIF-ONLY)

 

THIS AGREEMENT, made this 16^th day of June, 2020, by and between THE VANGUARD GROUP, INC. (“Vanguard”), a Pennsylvania corporation with its principal place of business in Pennsylvania, and MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY (the “Intermediary”), a Massachusetts mutual life insurance company with its principal place of business in Springfield, Massachusetts..

 

W I T N E S S E T H:

 

WHEREAS, Vanguard provides services as transfer agent, dividend disbursement agent, and shareholder servicing agent for the open-end management investment companies registered under the Investment Company Act of 1940, as amended (the “1940 Act”), that are included in The Vanguard Group of investment companies, as well as Vanguard STAR Funds and Vanguard Institutional Index Fund (each, a “Vanguard Fund” and collectively, the “Vanguard Funds”);

 

WHEREAS, the Intermediary is an insurance company which is supervised and examined by state authorities having supervision over insurance companies;

 

WHEREAS, the Intermediary has established or will establish one or more segregated asset accounts (each, an “Account” and collectively, the “Accounts”) to fund certain variable annuity contracts and/or variable life insurance policies (each, a “Policy” and collectively, the “Policies”) designed and issued by the Intermediary, which Accounts and Policies (and the interests therein) are, in each case, either (a) registered under the 1940 Act or the Securities Act of 1933, as amended (the “1933 Act”), respectively, or (b) not registered under the 1940 Act or the 1933 Act, respectively, in reliance upon exemptions therein; and

 

WHEREAS, each Account is a duly organized, validly existing segregated asset account, established by resolution of the Board of Directors of the Intermediary, to set aside and invest assets attributable to the Policies;

 

WHEREAS, the Intermediary and/or, if applicable, an underlying institution with which the Intermediary has entered into an agreement (each, an “Underlying Intermediary” and collectively, the “Underlying Intermediaries”), provides Policy owner accounting, record-keeping, administrative and/or other services to the Policies;

 

WHEREAS, the Intermediary or an Underlying Intermediary has established or will establish individual accounts on its record-keeping system reflecting all transactions by or on behalf of Policy owners which result in purchases, redemptions or current-day exchanges by the Accounts of shares of the portfolios of Vanguard Variable Insurance Fund (“VVI Fund”), one of the Vanguard Funds, listed on Schedule II attached to this Agreement (the “VVIF Portfolios”), as such schedule may be modified from time to time by mutual written agreement of the parties;

 

WHEREAS, Vanguard has established or will establish accounts on its mutual fund shareholder record-keeping system to reflect the Accounts’ ownership of shares of the VVIF Portfolios and all transactions by the Accounts involving such shares;

 

SCH I

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

WHEREAS, pursuant to the Intermediary’s agreements with the Underlying Intermediaries, if any, the Underlying Intermediaries transmit to the Intermediary orders for the purchase, redemption or exchanges by the Accounts of shares of the VVIF Portfolios, based upon transactions by or on behalf of Policy owners;

 

WHEREAS, Vanguard and the Intermediary are members of the National Securities Clearing Corporation (“NSCC”) or otherwise have access to the NSCC’s Fund/SERV system (“Fund/SERV”);

 

WHEREAS, Fund/SERV permits the electronic transmission of the Accounts’ account transaction data between Vanguard and the Intermediary; and

 

WHEREAS, Vanguard and the Intermediary desire to participate in Fund/SERV with respect to transactions by the Accounts involving shares of the VVIF Portfolios, pursuant to the terms and conditions set forth in this Agreement and the Operating and Contingency Procedures/Defined Contribution Clearance & Settlement, as they may be modified from time to time in Vanguard’s sole discretion, which are attached hereto and made a part hereof

(the “DCC&S Operating/Contingency Procedures”).

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.

Appointment of the Intermediary as Agent.

 

(a)            Authorization of Intermediary and Underlying Intermediaries. Subject to any and all limitations set forth in this Agreement and in the DCC&S Operating/Contingency Procedures, Vanguard, as transfer agent for the Vanguard Funds, hereby appoints the Intermediary as the limited agent of Vanguard, and the Intermediary hereby accepts such appointment, for the purpose of processing: (i) transaction instructions received by the Intermediary from Policy owners (to the extent such instructions would result in the purchase, redemption or exchange of VVIF Portfolio shares by an Account); and (ii) transaction directions received from Accounts. Transaction instructions and transaction directions described in (i) and (ii) of this section are referred to herein, collectively, as Instructions. The Intermediary may designate and authorize such Underlying Intermediaries as it deems necessary, appropriate or desirable, to accept, in such capacity, Instructions (each such designated and authorized Underlying Intermediary, a “Designated UI”). A VVIF Portfolio will be deemed to have received a purchase, redemption or exchange order when the Intermediary or a Designated UI accepts the Instructions in accordance with this Agreement. In most instances, a Policy owner or Account will receive the unit price corresponding to the share price next computed by the VVIF Portfolio after the time at which Instructions are received by the Intermediary or Underlying UI from such Policy owner or Account, provided all of the requirements and obligations of the Intermediary and the Designated UIs with respect to acceptance and transmission of orders set forth in this Agreement are satisfied. The Intermediary shall be liable to Vanguard and the VVI Fund for the Designated UIs’ compliance with the terms of this Section 1(a) to the same extent as if the Intermediary itself had acted or failed to act instead of the Designated UI.

 

(b)           Policy Owner-Level Transactions. The purchases, redemptions and exchanges accepted by the Intermediary and the Designated UIs, if any, pursuant to Section 1(a) above shall be based on: (i) Policy owner-level transactions made by or on behalf of Policy owners which are recorded on the Intermediary’s or a Designated UI’s record-keeping system; or (ii) other authorized transaction directions received by the Intermediary or a Designated UI from the Accounts which are recorded on the Intermediary’s or a Designated UI’s record-keeping system. For purposes of this Agreement, "Policy owner-level transactions" shall include:

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(A)        Any authorized Instruction to an Account by or on behalf of any Policy owner to invest in a VVIF Portfolio through the Account in accordance with the terms and conditions of the Policy and the VVI Fund prospectus;

 

(B)         Any authorized Instruction to an Account to exchange existing amounts held on behalf of any Policy owner to a VVIF Portfolio in accordance with the terms and conditions of the Policy and the VVI Fund prospectus;

 

(C)         Any authorized Instruction to an Account to exchange existing amounts invested in a VVIF Portfolio on behalf of any Policy owner to any other investment option offered under the Policy in accordance with the terms and conditions of the Policy and the VVI Fund prospectus; and

 

(D)         Any authorized Instruction to an Account on behalf of any Policy owner to pay withdrawal or distribution proceeds to a Policy owner from a VVIF Portfolio in accordance with the terms and conditions of the Policy and the VVI Fund prospectus.

 

(c)           Policy Recordkeeping.

 

(i)          The Intermediary or the appropriate Underlying Intermediaries shall maintain records for the Accounts and for the Policy owners reflecting all shares of the VVIF Portfolios purchased, redeemed and exchanged by the Accounts based on Policy owner-level transactions (including the date and price for all transactions and share balances) and all re-investments by the Accounts of dividends and capital gains distributions paid by the VVIF Portfolios. The Intermediary shall reconcile on each day that the New York Stock Exchange is open for trading (a “Business Day”) all transactions by the Accounts involving shares of the VVIF Portfolios (including purchases, redemptions and exchanges) with the corresponding Policy owner-level transactions on the Intermediary’s or the appropriate Underlying Intermediary’s record-keeping system. It is understood that the Intermediary’s or an Underlying Intermediary’s maintenance of Policy owner-level account records for an Account is done as the agent for the Account and not as the agent for Vanguard or any of its affiliates.

 

(ii)         The Intermediary shall promptly notify Vanguard if the Intermediary or any Underlying Intermediary experiences difficulty in maintaining Policy owner-level records described above in an accurate and complete manner. The Intermediary agrees to furnish Vanguard with such information as Vanguard may reasonably request from time to time in order for Vanguard to verify the Intermediary’s compliance with the terms of this Agreement (including, without limitation, periodic certifications confirming the provision of the Intermediary’s or any Underlying Intermediary’s record-keeping services to the Accounts in a manner consistent with the terms of this Agreement).

 

(d)           No Extension of Agency. Notwithstanding the authorizations granted by Vanguard under this Section 1, neither the Intermediary nor any Underlying Intermediary shall be, nor hold itself out to the public or engage in any activity as, an agent for Vanguard in respect of or in connection with the distribution or marketing of shares of the VVIF Portfolios.

 

(e)            Availability of Vanguard Fund Shares. The parties acknowledge and agree that the availability of shares of any Vanguard Fund shall be subject to the Vanguard Fund’s then-current prospectus and statement of additional information (including, but not limited to any terms and conditions therein relating to (i) the placing or processing of purchase, redemption, and exchange orders and the timing thereof; (ii) the implementation of liquidity fees and/or redemption gates, and (iii) with respect to retail money market funds (as defined in Rule 2a-7 promulgated under the Investment Company Act of 1940) (“Retail MMFs”), compliance with shareholder eligibility requirements as disclosed in the prospectus, or as otherwise required under Rule 2a-7 or as interpreted by the U.S. Securities and Exchange Commission (“SEC”) or its staff). The parties also acknowledge and agree that the availability of shares of any Vanguard Fund shall be subject to applicable federal and state laws, and applicable rules and regulations of the SEC and the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Intermediary agrees that it or, subject to the requirements of Section 14 below, the Underlying Intermediaries, if any, will, where applicable, abide by the terms and conditions of the Money Market Fund Procedures set forth in Exhibit B, as such Exhibit may be modified by Vanguard from time to time in its discretion

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

2.

Compliance Responsibilities.

 

(a)           Vanguard is responsible for (i) the compliance of each prospectus, registration statement, annual or other periodic report, proxy statement and item of advertising or marketing material prepared by it relating to each VVIF Portfolio with all applicable laws, rules and regulations (except for advertising or marketing material prepared by the Intermediary to the extent any information therein was not published or provided to the Intermediary by or on behalf of Vanguard or the VVI Fund or accurately derived from information published or provided by or on behalf of Vanguard or the VVI Fund), (ii) the registration or qualification of the shares of each VVIF Portfolio under all applicable laws, rules and regulations, and (iii) the compliance by Vanguard and the VVI Fund with all applicable laws, rules and regulations (including the ▇▇▇▇ ▇▇▇) governing its performance under this Agreement, and the rules and regulations of each self-regulatory organization with jurisdiction over Vanguard or the VVI Fund, except to the extent that the failure to so comply by Vanguard or the VVI Fund is caused by the Intermediary’s breach of this Agreement or the Intermediary’s or any Underlying Intermediary’s willful misconduct or negligence in the performance of, or failure to perform, its obligations under this Agreement.

 

(b)           The Intermediary is responsible for the Intermediary’s and the Underlying Intermediaries’, if any, compliance with all applicable laws, rules and regulations governing their performance under this Agreement, and the rules and regulations of each self-regulatory organization with jurisdiction over the Intermediary or the Underlying Intermediaries, except to the extent that the Intermediary’s or an Underlying Intermediary’s failure to comply with any law, rule or regulation is caused by Vanguard’s breach of this Agreement or Vanguard’s willful misconduct or negligence in the performance of, or failure to perform, its obligations under this Agreement.

 

3.

Fees and Expenses.

 

(a)            Vanguard and the Intermediary agree that no fees will be paid to, or exchanged or shared between Vanguard and the Intermediary under this Agreement.

 

(b)           Each party will pay all of its out-of-pocket expenses incurred in connection with the performance of its obligations under this Agreement, except as may otherwise be specified in this Agreement.

 

4.

Representations and Warranties.

 

(a)

Vanguard represents and warrants that:

 

(i)          It has the requisite authority to enter into this Agreement on its own behalf and on behalf of the VVI Fund;

 

(ii)         It has taken all actions legally necessary to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder, and this Agreement has been duly executed and delivered by its authorized representative and constitutes its legal, valid and binding obligation, enforceable against Vanguard in accordance with its terms;

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(iii)        It or an affiliate is in compliance with the applicable conditions and qualifications set forth in Rule 2830 of the Conduct Rules of FINRA, as amended from time to time, which enable a member of FINRA to offer or sell shares of the VVIF Portfolios;

 

(iv)        The VVI Fund is a no load or no sales charge fund;

 

(v)         Either the VVI Fund, Vanguard or its agent is a Fund Member of the NSCC and has

access to the NSCC’s Fund/SERV system; and

 

(vi)        Vanguard currently has and at all times pertinent hereto will have sufficient financial resources, whether through a fidelity bond or otherwise, to meet all of its financial obligations arising under this Agreement, including its obligations under Section 12 of this Agreement.

 

(b)           The Intermediary represents and warrants that:

 

(i)          It and each Underlying Intermediary is one or more of the following: (A) a broker-dealer registered under the Exchange Act and a member in good standing of FINRA; (B) an investment adviser registered under the Investment Advisers Act of 1940, as amended; (C) a bank or trust company which is a member of the Federal Reserve System or is supervised and examined by state or federal authorities having supervision over banks; (D) an insurance company which is supervised and examined by state authorities having supervision over insurance companies; or (E) a transfer agent or clearing agency registered under the Exchange Act;

 

(ii)         It or a relevant designee is an NSCC Member and has access to Fund/SERV;

 

(iii)        It has taken all actions legally necessary to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder, and this Agreement has been duly executed and delivered by its authorized representative and constitutes its legal, valid and binding obligation, enforceable against the Intermediary in accordance with its terms;

 

(iv)        All orders for the purchase, redemption and exchange of shares of, and/or registration of an account in, the VVI Fund and/or any VVIF Portfolio (“Orders”) which correspond to Instructions received on a Business Day from Policy owners, or to other authorized transaction directions received on a Business Day from an Account, by the Intermediary or, subject to the requirements set forth in Section 14 below, by a Designated UI, and any corrections to such Orders, will be entered by the Intermediary onto Fund/SERV by the applicable daily cutoff time for Order entries or entry corrections set forth in the DCC&S Operating/Contingency Procedures;

 

(v)         No Order shall be transmitted to Vanguard through Fund/SERV unless (A) the Intermediary or, subject to the requirements set forth in Section 14 below, a Designated UI, has received the Instructions corresponding to such Order prior to Market Close (as defined below) on the Business Day corresponding to the Indicated Trade Date (as defined below) for such Order, and (B) the Order is for an Account and Policy identified on Schedule I to this Agreement and for a VVIF Portfolio identified on Schedule II to this Agreement;

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

(vi)        Neither it nor any Underlying Intermediary will permit an Account or a Policy owner to cancel or modify after Market Close on a Business Day any Order or Instructions, respectively, received from such Account or Policy owner prior to Market Close on such Business Day;

 

(vii)       All Orders transmitted to Vanguard through Fund/SERV pursuant to this Agreement will have been duly authorized by the applicable Account;

 

(viii)      With respect to all Orders transmitted to Vanguard through Fund/SERV pursuant to this Agreement, the Intermediary will maintain, or cause to be maintained, records sufficient to document the truth of the representations and warranties set forth in this Section 4(b); such records will be available to Vanguard for inspection promptly upon written request;

 

(ix)        The Intermediary maintains policies and procedures that are designed to ensure compliance with the requirements of Rule 22c-1 under the 1940 Act, applicable SEC and SEC staff interpretations, and the terms of this Agreement, and the Intermediary is in compliance with such policies and procedures;

 

(x)         The Intermediary currently has and at all times pertinent hereto will have sufficient financial resources, whether through a fidelity bond or otherwise, to meet all of its financial obligations arising under this Agreement, including its obligations under Section 12 of this Agreement;

 

(xi)        In connection with the authorizations in Section 1 of this Agreement, the Intermediary represents and warrants to Vanguard that:

 

(A)         The Intermediary has implemented an internal control structure and adopted written internal control procedures that are reasonably designed to prevent and detect on a timely basis Instructions received by the Intermediary after Market Close from being aggregated with Instructions received by the Intermediary before Market Close, and to minimize errors that could result in late transmission of Orders to Vanguard (“Internal Control Procedures”).

 

(B)          The Intermediary will review, no less than annually, the adequacy of its Internal Control Procedures and will change and modify them as necessary to maintain their adequacy.

 

(C)          Each Designated UI, if any, has adopted and implemented written internal controls that are reasonably designed to prevent and detect on a timely basis Instructions received by the Designated UI after Market Close from being aggregated with Instructions received by the Designated UI before Market Close, and to minimize errors that could result in late transmission of Orders to Vanguard (“Designated UI Internal Control Procedures”).

 

(D)          Each Designated UI will be required to review, not less than annually, the adequacy of its Designated UI Internal Control Procedures and to change and modify them as necessary to maintain their adequacy.

 

(E)          Upon written request by Vanguard, the Intermediary will provide Vanguard with a description of its Internal Control Procedures and a certification from the Intermediary that they are adequate as of the most recent review, as well as a certification that each Designated UI, if any, has adopted and implemented Designated UI Internal Control Procedures that are adequate as of the most recent review.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

For the purposes of this Agreement, “Market Close” shall mean the close of the New York Stock Exchange (generally, 4:00 p.m. Eastern Time), and “Indicated Trade Date” shall mean a trade date indicated or otherwise requested to be assigned to an Order transmitted or otherwise submitted to Vanguard, as indicated in the applicable transmission or other submission.

 

5.

Obligations of Vanguard.

 

(a)           Transactions Subject to Fund/SERV. Vanguard will accept Orders transmitted by the Intermediary through Fund/SERV on behalf of the Accounts in accordance with this Agreement and the DCC&S Operating/Contingency Procedures. Vanguard will be responsible for processing and executing any such Orders from the Intermediary in a timely manner.

 

(b)           Performance of Duties. Vanguard will perform any and all duties, functions, procedures and responsibilities assigned to it under this Agreement and as otherwise established by the NSCC from time to time. Vanguard will maintain facilities, equipment and skilled personnel sufficient to perform the foregoing activities and to otherwise comply with the terms of this Agreement. Vanguard will conduct each of the foregoing activities in a competent manner and in compliance with (i) all applicable laws, rules and regulations, including NSCC rules and procedures relating to Fund/SERV, and (ii) the then-current prospectus, statement of additional information (“SAI”), and policies of the VVI Fund; provided, however, that in the event of a conflict between the provisions of the DCC&S Operating/Contingency Procedures and any applicable “optional” NSCC rule or procedure, the DCC&S Operating/Contingency Procedures will control.

 

(c)           Accuracy of Information, Transmissions Through and Access to Fund/SERV. All information provided by Vanguard to the Intermediary through Fund/SERV and pursuant to this Agreement will be accurate, complete and in the format prescribed by the NSCC. Vanguard will adopt, implement and maintain procedures reasonably designed to ensure the accuracy of all transmissions through Fund/SERV and to limit the access to, and the inputting of data into, Fund/SERV to persons specifically authorized by Vanguard.

 

(d)           Pricing Information. On every Business Day, Vanguard will transmit by 7:00 p.m., Eastern time, each VVIF Portfolio’s closing net asset value and public offering price (if applicable) for that day and/or notification of no price for that day, to the Intermediary via both the NSCC’s Mutual Fund Profile Service and such other transmission method mutually agreed to by the parties. Vanguard shall provide such information on a best efforts basis taking into consideration any extraordinary circumstances arising at the VVI Fund (e.g., natural disasters, etc.). Neither the Intermediary nor any Underlying Intermediary shall be entitled to rely on any source of net asset value information other than such transmission by Vanguard.

 

6.

Obligations of the Intermediary.

 

(a)           Performance of Duties. The Intermediary will perform any and all duties, functions, procedures and responsibilities assigned to it under this Agreement and as otherwise established by the NSCC from time to time. The Intermediary will maintain facilities, equipment and skilled personnel sufficient to perform the foregoing activities and to otherwise comply with the terms of this Agreement. The Intermediary will conduct each of the foregoing activities in a competent manner and in compliance with all applicable laws, rules and regulations, including NSCC rules and procedures relating to Fund/SERV; provided, however, that in the event of a conflict between the provisions of the DCC&S Operating/Contingency Procedures and any applicable

“optional” NSCC rule or procedure, the DCC&S Operating/Contingency Procedures will control.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

(b)           Accuracy of Information, Transmissions Through and Access to Fund/SERV. All information provided by the Intermediary to Vanguard through Fund/SERV and pursuant to this Agreement will be accurate, complete and in the format prescribed by the NSCC. For each Fund/SERV Order, the Intermediary will provide Vanguard with all information reasonably required by Vanguard to establish and maintain such Order (and any subsequent adjustments to such Order). The Intermediary will adopt, implement and maintain procedures reasonably designed to ensure the accuracy of all transmissions through Fund/SERV and to limit the access to, and the inputting of data into, Fund/SERV to persons specifically authorized by the Intermediary.

 

(c)           Accepting and Transmitting Orders. As provided in Section 1, and in accordance with the procedures set forth below and in the DCC&S Operating/Contingency Procedures, the Intermediary will act as the limited agent of Vanguard to receive Instructions from the Accounts, corresponding to purchase, redemption and exchange Orders by the Accounts, for shares of the VVIF Portfolios. All such Orders shall be settled with the NSCC, except as otherwise provided in the DCC&S Operating/Contingency Procedures.

 

(i)           Receipt by the Intermediary or Designated UI of Policy Owner-Level Transactions. The parties understand and agree that the Intermediary or, subject to the requirements of Section 14 below, a Designated UI, may receive Policy owner-level transactions in various formats, including directions in writing, by computer magnetic tape, diskette or electronic data transmission, through interactive voice response system, or by any other accepted method for transmitting data that is adopted for the Accounts. All Policy owner-level transactions shall be received and processed by the Intermediary or a Designated UI in accordance with its standard transaction processing procedures that apply to all investment options offered under the Policies. The Intermediary or the relevant Designated UI, if any, shall maintain records sufficient to identify the date and time of receipt of all Policy owner-level transactions involving the VVIF Portfolios and shall make such records available upon request for examination by Vanguard or its designated representative or, at the request of Vanguard, by appropriate governmental authorities or self-regulatory organizations. Under no circumstances shall the Intermediary or any Designated UI change, alter or manipulate any Policy owner-level transactions received by it in good order.

 

(ii)          Transmission by the Intermediary of Orders. Based on the Policy owner Instructions and other authorized Account transactions received by the Intermediary and any Designated UIs prior to Market Close on each Business Day, the Intermediary shall transmit to Vanguard via Fund/SERV by the time of receipt of Cycle 7 from the NSCC on the following Business Day (approximately 7:00 a.m. Eastern time) a file containing the Order, in dollars or shares, by each Account for shares of each VVIF Portfolio for the preceding Business Day. Each transmission by the Intermediary of an Order shall constitute a representation by the Intermediary that such Order was based solely on Policy owner-level transactions and other authorized Account transaction directions received by the Intermediary or a Designated UI, if applicable, prior to the Market Close on the previous Business Day, and that such Order included only and all such transactions so received by the Intermediary or Designated UI, as the case may be.

 

(iii)         VVIF Portfolios. In connection with the Accounts and Policies, the Intermediary shall submit Orders to Vanguard, and shall permit Orders to be submitted to Vanguard, in relation to only those portfolios of the VVI Fund that are set forth in Schedule II, as such schedule may be amended by mutual written agreement of the parties from time to time.

 

(d)           Extraordinary Events. The Intermediary is not authorized to accept as Vanguard’s agent any Order for the purchase or redemption of shares in an amount which equals or exceeds the ‘‘Large Transaction Amount’’ for a VVIF Portfolio, as specified in Attachment A to the DCC&S Operating/Contingency Procedures (‘‘Attachment A’’), where such Order is the result of an ‘‘Extraordinary Event’’ of which the Intermediary is aware, unless the Intermediary has notified Vanguard of such Order as soon as practicable on the trade date and in no event later than one hour prior to the Market Close on the trade date. For these purposes, an ‘‘Extraordinary Event’’ shall mean an event outside the normal operation of an Account such as an entire Account moving into or out of a VVIF Portfolio or an asset transfer or merger arising from a merger, acquisition or divestiture. In accordance with the prospectus of the VVI Fund, Vanguard reserves the right to refuse any purchase Order, or to delay settlement of any redemption Order, which Vanguard, in its sole discretion, deems disruptive or detrimental to the VVI Fund. In connection with any redemption Order that equals or exceeds the applicable Large Transaction Amount, Vanguard reserves the right to delay delivery of redemption proceeds for up to seven days, to the extent permitted by applicable law or regulation, or to effect the redemption through an in-kind distribution of securities. Vanguard reserves the right to revise Attachment A at any time and will provide 30 days’ advance written notice of such revision to the Intermediary.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

(e)           Closed Portfolios. On occasion, Vanguard may close to new or existing investors one or more of the VVIF Portfolios (“Closed Funds”) on terms or subject to conditions that may vary from Closed Fund to Closed Fund.

 

(i)           If, pursuant to the terms of a Closed Fund’s closure, any Closed Fund remains available to Accounts investing in the Closed Fund, then from and after the date on which such Closed Fund is closed to new investors (as such date is determined by Vanguard), the Intermediary will not:

 

(A)           Open a new account in such Closed Fund, or

 

(B)           Transmit an Order to purchase shares of such Closed Fund,

 

unless, in either case, the Account for which such account is opened or Order is transmitted is eligible to invest in such Closed Fund pursuant to the terms of the closure and, if applicable, the aggregate amount invested in the Closed Fund by such Account during the relevant period does not exceed any maximum investment limitation imposed in connection with the fund closing.

 

(ii)           If a new account is opened in a Closed Fund or a purchase of shares in a Closed Fund is requested in violation of this Section 6(e), Vanguard shall be authorized to cancel the Order by means of which the new account was opened or the purchase was requested at any time and, in the case of a new account, to terminate the account at any time. Any such cancellation and/or termination shall be on a current-day basis, and Vanguard will return to the Intermediary the lesser of (A) the amount initially invested in violation of paragraph (i) above or (B) the then-current value of such investment.

 

(f)            Advance Information. Vanguard will provide the Intermediary with reasonable notice of any revisions to the VVI Fund’s prospectus and/or SAI that Vanguard believes would affect the Intermediary’s performance of its duties and obligations pursuant to this Agreement. In addition, from time to time, the VVI Fund may implement policy changes that affect the Intermediary’s performance of recordkeeping for an Account. In order to allow the Intermediary a reasonable amount of time to make any necessary adjustment to its record-keeping systems, Vanguard, in its sole discretion, may communicate such policy changes to the Intermediary before transmitting this information to VVI Fund shareholders as a whole (“Advance Information”). The Intermediary shall treat all Advance Information as confidential pursuant to Section 11 of this Agreement and, prior to its being made public by Vanguard, shall use such information solely for systems adjustment purposes. The Intermediary shall communicate Advance Information to its own directors, officers and employees on a need to know basis, only. Under no circumstances shall the Intermediary communicate Advance Information to any Underlying Intermediary or any Policy owners, or to anyone else except as expressly permitted in this Section 6(f) or with Vanguard’s prior written consent, until such information becomes publicly available.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

(g)       Tax Compliance and Reporting.

 

(i)             Responsibilities of the Intermediary and/or the Underlying Intermediaries. The Intermediary, or the Underlying Intermediaries, if any, shall be responsible for obtaining all information necessary in order to assure that all Accounts in the VVIF Portfolios are established and maintained in compliance with applicable tax laws, rules and regulations. The Intermediary or the Underlying Intermediaries, if any, shall comply in all respects with any and all applicable obligations relating to tax reporting and withholding pursuant to the Internal Revenue Code of 1986, as amended (the “Code”), or other applicable tax laws, rules and regulations, including without limitation such obligations relating to Account purchases and redemptions and any Policy owner-level transactions. The Intermediary or the Underlying Intermediaries, if any, shall promptly advise Vanguard or the VVI Fund of any matter that may affect the responsibilities of the VVI Fund or Vanguard to Policy owners pursuant to the Code or other applicable tax laws, rules and regulations. All information that is received by the Intermediary from the VVI Fund or Vanguard for inclusion in Policy owner tax statements shall be reported to the Policy owners accurately, completely and in a timely manner. The Intermediary also agrees to obtain and maintain, and to the extent necessary, provide to the VVI Fund or Vanguard, for each account in a VVIF Portfolio, all forms or documents required by applicable laws, rules or regulations with regard to any of the foregoing.

 

(ii)            Tax Status of the Intermediary and/or the Underlying Intermediaries. Upon execution of this Agreement, the Intermediary and the Underlying Intermediaries, if any, will provide Vanguard with a duly completed Internal Revenue Service (“IRS”) Form W-9 (Request for Taxpayer Identification Number and Certification), or any updated or successor form, signed under penalties of perjury. The Intermediary agrees to cause any Underlying Intermediaries designated by the Intermediary following execution of this Agreement to provide Vanguard with a duly completed IRS Form W-9, or any updated or successor form, signed under penalties of perjury. The Intermediary agrees, and will cause all Underlying Intermediaries, if any, to notify Vanguard of any changes in its respective tax status and, as appropriate, to provide Vanguard with a new IRS Form W-9, or any updated or successor form.

 

(iii)          Survival of Tax Obligations. As the Intermediary and the Underlying Intermediaries, if any, are responsible hereunder for complying with all applicable laws, rules and regulations concerning the proper establishment and continued maintenance of their respective accounts in the VVIF Portfolios, including, without limitation, IRS or Code requirements regarding certified tax identification numbers and compliance with all applicable tax laws, rules and regulations relating to tax reporting and withholding, Vanguard and the VVI Fund will not be responsible for compliance therewith. All obligations of the Intermediary and the Underlying Intermediaries, if any, related to such tax compliance, including without limitation compliance with all notice obligations under IRS or Code requirements and payment of any and all related fines, interest, penalties or tax, shall survive termination of the Intermediary’s and any Underlying Intermediaries’ accounts and this Agreement.

 

(iv)          Manual Settlement Procedures. If the Intermediary or any Underlying Intermediary instructs Vanguard or the VVI Fund to remit payments other than to the Intermediary or an Underlying Intermediary as provided in Section 5(f) of the DCC&S Operating/Contingency Procedures and Vanguard or the VVI Fund accepts such instructions, the Intermediary or Underlying Intermediary will be responsible hereunder for complying with all applicable tax laws, rules and regulations concerning such payment, including without limitation any tax reporting and withholding requirements under IRS or Code requirements.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(h)           Certain Transactions and Restrictions.

 

(i)            The Intermediary agrees that it will provide, not later than five Business Days after receipt of a written request by Vanguard on behalf of a VVIF Portfolio, the Taxpayer Identification Number of any or all Policy owner(s) and the amount, date, name of investment professional associated with the Policy owner (if any), and transaction type (purchase, redemption, transfer, or exchange) of every purchase, redemption, transfer, or exchange of shares of such VVIF Portfolio held through an account maintained by the Intermediary or an Underlying Intermediary during the specific period covered by the request. Unless required by applicable law, rule or regulation, Vanguard and the VVIF Portfolios agree not to use the information received under this Section for marketing or any other purpose not related to (A) limiting or reducing abusive trading in shares issued by the VVIF Portfolios or (B) collecting purchase or redemption fees (if any).

 

(ii)           The Intermediary agrees that it will execute, or cause the relevant Underlying Intermediary to execute, written instructions from Vanguard on behalf of a VVIF Portfolio, including instructions to restrict or prohibit purchases or exchanges of VVIF Portfolio shares in specific accounts or by or on behalf of specific Policy owners identified by such VVIF Portfolio. Any such instructions by Vanguard shall include the Taxpayer Identification Number or equivalent identifying number of the Policy owner(s) to which the instructions relate and the specific restriction(s) to be executed. The Intermediary agrees that it will execute, or cause the relevant Underlying Intermediary to execute, any such instructions as soon as reasonably practicable, but not later than five Business Days after receipt of the instructions by the Intermediary.

 

(iii)          The Intermediary will provide to Vanguard, or will cause any applicable Underlying Intermediaries to provide to Vanguard, the identity of, and any other information concerning, the Accounts and Policy owners, where Vanguard, a Fund, or a Fund’s advisor, transfer agent, or distributor is required by an applicable law, rule or regulation, including the rules and regulations of any self-regulatory organization, to obtain such information and Vanguard makes a written request, with reasonable advance notice, to the Intermediary for such information. Vanguard and the Funds shall treat all such information as confidential pursuant to Section 11 below and shall not use, or permit the use of, such information for any purpose other than those necessary to comply with the applicable law, rule or regulation.

 

7.

Adjustments.

 

(a)           Same Day Order Corrections. Vanguard will accept and honor corrections to any Orders transmitted by the Intermediary through Fund/SERV in accordance with the DCC&S Operating/Contingency Procedures.

 

(b)           Overpayments. In the event that either party makes an overpayment to the other party in connection with a Fund/SERV Order, the party that has been overpaid will promptly repay the other party the total amount of such overpayment upon receipt of notice of such overpayment. Notwithstanding the foregoing, if an Account or Policy owner has received cash in excess of that to which it is entitled, the Intermediary will, when requested by Vanguard, and to the extent practicable and permitted by law, debit or cause to be debited from the relevant account the amount of such excess, but only to the extent of any cash in the account, and repay it to the affected VVIF Portfolio. Upon the request of Vanguard, and to the extent practicable, the Intermediary shall provide Vanguard with the names of Policy owners and other relevant information concerning the affected accounts to assist Vanguard in the collection of any such excess amount not repaid to the VVIF Portfolios.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

(c)           Processing Adjustments. Each Business Day the Intermediary and Vanguard will reconcile their records so that an appropriate number of shares of each of the VVIF Portfolios is credited to the Intermediary’s accounts on behalf of the Accounts invested in the VVIF Portfolios.

 

(i)            In the event of any error (other than a Pricing Error, as hereinafter defined) or delay with respect to the procedures outlined in this Agreement that is caused by Vanguard, Vanguard shall make any adjustments on Vanguard’s accounting system necessary to correct such error or delay and shall reimburse the Intermediary for any losses or reasonable costs incurred directly as a result of the error or delay.

 

(ii)           In the event of any error or delay in transmitting an Order that is caused by the Intermediary or any Underlying Intermediary and which is not corrected in accordance with Section 7(a) above, the following provisions will apply:

 

(A)         Upon receipt from the Intermediary of documentation sufficient in Vanguard’s sole discretion to establish the details of such Order and the time at which it or the corresponding Instructions were received from the Account or Policy owner by the Intermediary or an Underlying Intermediary, Vanguard will correct its records to reflect the Order as transmitted to Vanguard by the Intermediary; and

 

(B)          The Intermediary will promptly reimburse the Account, Vanguard and the VVIF Portfolios for any losses or reasonable costs incurred directly as a result of the error or delay. The Intermediary agrees that, insofar as Vanguard and the VVIF Portfolios are concerned, such losses or reasonable costs will include, at a minimum, any market or administrative costs associated with effecting Orders on an “as of” basis or canceling such Orders.

 

(iii)          The Intermediary and Vanguard, respectively, each agree to provide the other prompt notice of any errors or delays of the type referred to in this Section 7(c) and to use reasonable efforts to take such action as may be appropriate to avoid or mitigate any costs or losses resulting from such errors or delays.

 

(d)           Pricing Errors. In the event of an error in the computation of a VVIF Portfolio's net asset value per share which, in accordance with procedures adopted by the Fund's Board of Trustees consistent with views expressed by the SEC regarding appropriate error correction standards, as shall be in effect or amended from time to time, requires adjustment to Orders previously effected on behalf of an Account (a "Pricing Error"), Vanguard shall notify the Intermediary as soon as possible after discovery of the Pricing Error. Such notification may be oral, but shall be confirmed promptly in writing. In such event, Vanguard shall reimburse the affected VVIF Portfolio for any loss (without taking into consideration any positive effect of such Pricing Error) and shall make appropriate adjustments to the Intermediary’s accounts, which adjustments shall net the impact of individual Policy owner gains and losses; this will result in either a net payment to the Intermediary from Vanguard (in the event of net Policy owner losses) or from the Intermediary to Vanguard (in the event of net Policy owner gains). In addition, in the event that the Pricing Error causes the Intermediary to incur any direct costs for re-processing Policy owner accounts, such as preparing and mailing revised statements, Vanguard shall reimburse the Intermediary for all such reasonable costs upon receipt from the Intermediary of an invoice or other statement documenting such costs in reasonable detail.

 

8.            Contingency Procedures. In the case of any interruptions to the transmission or receipt of Orders through Fund/SERV, the Intermediary will submit Orders to Vanguard in accordance with the contingency procedures set forth in the DCC&S Operating/Contingency Procedures, as in effect from time to time.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

9.

VVI Fund Information.

 

(a)           Vanguard will supply to the Intermediary upon request reasonably sufficient supplies of the materials listed below for distribution to Policy owners who hold VVIF Portfolio shares through the Accounts, which distribution shall be arranged by the Intermediary to occur immediately upon the effective date of the materials or as soon thereafter as practicable:

 

(i)            All proxy or information statements prepared for circulation to shareholders of record of a VVIF Portfolio;

 

(ii)           Annual and semi-annual reports; and

 

(iii)          All updated prospectuses, supplements and amendments thereto.

 

(b)           The Intermediary will timely deliver, or cause to be delivered, to Policy owners all VVI Fund prospectuses and shareholder reports and related materials as required by applicable laws, rules or regulations, rules or regulations of any self-regulatory organization with jurisdiction over any of Vanguard, the Vanguard Funds or the Intermediary, and/or the Intermediary’s agreement with the Policy owner.

 

(c)           The Intermediary shall furnish, or shall cause to be furnished, to Vanguard or its designee, each piece of sales literature or other promotional material prepared by or on behalf of the Intermediary in which Vanguard or any VVIF Portfolio is named, at least ten Business Days prior to its use. The Intermediary may use such material (i) in fewer than ten Business Days if it receives the written consent of Vanguard, or (ii) after ten Business Days if Vanguard does not reasonably object to such use within ten Business Days after its receipt of such material. No such material shall be used if Vanguard reasonably objects to such use within ten Business Days after receipt of such material. With regard to any such sales literature or promotional material furnished by the Intermediary to Vanguard, the Intermediary shall bear the sole responsibility for complying with the content, approval, filing, and recordkeeping requirements of FINRA Conduct Rule 2210, if and to the extent applicable. Notwithstanding the foregoing, the Intermediary may use, and Vanguard authorizes the Intermediary to use, the names or other identifying marks of, and certain information about, Vanguard and the VVIF Portfolios in fund fact sheets containing VVIF Portfolio-specific data furnished by Vanguard. Vanguard may withdraw the authorization granted in this Section 9(c) as to any particular use of any such name or identifying marks at any time (A) upon Vanguard’s reasonable determination that such use would have a material adverse effect on the reputation or marketing efforts of Vanguard or the VVI Fund, which determination may be due to the availability of updated or modified information regarding a VVIF Portfolio or Vanguard, or (B) if any of the VVIF Portfolios cease to be available to Policy owners through the Intermediary.

 

10.

Use of Parties’ Names; No Publication of Terms.

 

(a)           Neither Vanguard nor the Intermediary shall make public the terms and conditions of this Agreement without the consent of the other party, which consent shall not be unreasonably withheld; provided, however, that if public disclosure of such information is required by law, such consent shall be deemed granted and the party required to disclose such information shall, if practicable, notify the other party prior to such disclosure.

 

(b)            Except as specifically permitted under this Agreement, without the other party’s prior written consent, neither party to this Agreement shall acquire any right to use, nor shall use, cause or permit use of the names, characters, artwork, designs, trade names, copyrighted materials, trademarks or service marks of the other party, its related or subsidiary companies, parent, employees, directors, shareholders, assigns, successors or licensees: (i) in any advertising, promotional materials or activities, publicity, press release, customer list, or public or private presentation or promotion; (ii) to express or to imply any endorsement of such party or any of its affiliates or their respective offerings or services; or (iii) in any manner other than expressly in accordance with this Agreement or any other applicable agreement between the parties and/or any of their respective affiliates.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

11.          Proprietary Information and Privacy. Each party hereto acknowledges that the identities of the other party’s customers (including, with respect to the Intermediary, for purposes of this Section, Policy owners), information maintained by such other party regarding those customers (“Customer Information”), and all computer programs and procedures developed by such other party or such other party’s affiliates or agents in connection with such other party’s performance of its duties hereunder constitute the valuable property of such other party. Each party agrees that should it come into possession of any Customer Information, or any other property, of the other party, pursuant to this Agreement or any other agreement related to services under this Agreement, the party who acquired such information or property shall use its best efforts to hold such information in confidence and refrain from using, disclosing, or distributing any of such information or other property, except (a) as required or necessary to carry out the obligations imposed by this Agreement, (b) with the other party’s prior written consent, or (c) as required by law or judicial process. In addition to the foregoing, Vanguard shall have the additional limited right to use Customer Information supplied by the Intermediary (i) for the purpose of providing educational services to, and discussing investment positions and alternatives with, underlying institutional clients having an existing relationship with Vanguard and (ii) for Vanguard’s own internal business purposes, including but not limited to, service processing, resource allocation, and performance metrics. Vanguard will not use Customer Information to solicit business from an underlying client unless Vanguard has an existing relationship with the underlying client. Vanguard may solicit business from underlying clients with which it does not have an existing relationship; provided that it does so without using such Customer Information. Each party agrees to comply with all applicable privacy laws, including those promulgated pursuant to Title V of the ▇▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of 1999. Each party agrees to maintain physical, electronic and procedural safeguards reasonably designed to protect the security, confidentiality, and integrity of, and to prevent unauthorized access to or use of, Customer Information. Each party acknowledges that any breach of the foregoing agreements as to the other party would result in immediate and irreparable harm to such other party for which there would be no adequate remedy at law and agrees that in the event of such a breach, such other party will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction shall deem appropriate. Notwithstanding the foregoing, this Section shall not prohibit either party from utilizing the other party’s Customer Information for any purpose whatsoever, if and to the extent such Customer Information: (i) is or becomes a matter of public knowledge through no fault of such party; or (ii) was in such party’s possession or known by it prior to receipt from such other party; or (iii) was rightfully disclosed to such party by another person without restriction; or (iv) is independently developed by such party without access to such other party’s Customer Information.

 

12.          Indemnification.

 

(a)         Vanguard. Vanguard will indemnify and hold harmless the Intermediary, and each of the Intermediary’s affiliates, divisions, subsidiaries, directors, officers, agents, employees and permitted assigns, against and from any and all losses, damages, costs, charges, payments, claims, liabilities and expenses (including reasonable attorney’s fees) arising out of or attributable to: (i) Vanguard’s lack of good faith, negligence, or willful misconduct in carrying out its duties and responsibilities relating to this Agreement; (ii) any breach of Vanguard’s representations and warranties contained in this Agreement; and (iii) any breach by Vanguard of a material provision of this Agreement. In addition to the foregoing, Vanguard will be liable for the losses and reasonable costs described in Section 7(c)(i) of this Agreement.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(b)           Intermediary. The Intermediary will indemnify and hold harmless Vanguard, the VVI Fund, and each of their respective affiliates, divisions, subsidiaries, directors, officers, agents, employees and permitted assigns, against and from any and all losses, damages, costs, charges, payments, claims, liabilities and expenses (including reasonable attorney’s fees) arising out of or attributable to: (i) the Intermediary’s or any Underlying Intermediary’s lack of good faith, negligence, or willful misconduct in carrying out its duties and responsibilities relating to this Agreement; (ii) any breach of the Intermediary’s representations and warranties contained in this Agreement; (iii) any breach by the Intermediary or an Underlying Intermediary of a material provision of this Agreement; and (iv) Vanguard’s acceptance of any Order through Fund/SERV. In addition to the foregoing, the Intermediary will be liable for the losses and reasonable costs described in Section 7(c)(ii) of this Agreement.

 

(c)           Notice and Opportunity to Defend. If any action, suit, proceeding, or investigation is initiated, or any claim or demand is made, against any party indemnified hereunder (an “Indemnified Party”) with respect to which such Indemnified Party may make a claim against the other party (“Indemnifying Party”) pursuant to this Section 12, then the Indemnified Party will give prompt written notice of such action, suit, proceeding, investigation, claim or demand to the Indemnifying Party. Thereafter, the Indemnifying Party will have the opportunity, at its own expense and with its own counsel, to defend or settle such action, suit, proceeding, investigation, claim or demand; provided, however, that: (i) the Indemnifying Party will keep the Indemnified Party informed of all material developments and events relating to such action, suit, proceeding, investigation, claim or demand; (ii) the Indemnified Party will have the right to participate, at its own expense in the defense of such action, suit, proceeding, investigation, claim or demand and will cooperate as reasonably requested by the Indemnifying Party in the defense thereof; and (iii) the Indemnifying Party will not settle such action, suit, proceeding, investigation, claim or demand without the prior written consent of the Indemnified Party, which consent will not be unreasonably withheld.

 

13.          Role and Relationship of the Intermediary. The parties acknowledge and agree that the services provided by the Intermediary under this Agreement are not the services of an underwriter, principal underwriter, sub-distributor, or dealer of the VVI Fund within the meaning of the 1933 Act or the 1940 Act. This Agreement does not grant the Intermediary or any Underlying Intermediary any right to purchase shares of any VVIF Portfolio (although it does not preclude the Intermediary or an Underlying Intermediary from purchasing any such shares), nor does it constitute the Intermediary or any Underlying Intermediary an agent of Vanguard or the VVI Fund for purposes of selling shares of any VVIF Portfolio to any dealer or the public, except as expressly stated in this Agreement as to the receipt of Instructions from or on behalf of Policy owners. To the extent the Intermediary or an Underlying Intermediary is involved directly or indirectly in the purchase of shares of any VVIF Portfolio under this Agreement, other than with respect to the acceptance of Instructions as described in Section 1(a), such involvement will be as agent of the Accounts only.

 

14.          Intermediary’s Agreements with Underlying Intermediaries. The Intermediary represents and warrants that it has entered into an agreement with each Underlying Intermediary, if any, or shall enter into such an agreement before making the VVIF Portfolios available to an Underlying Intermediary, which agreements shall require the Underlying Intermediaries to agree to comply with Vanguard’s requirements regarding Money Market Fund Procedures, Extraordinary Event reporting, Closed Funds, and tax compliance and reporting, as set forth in Section 6 of this Agreement. In addition, the Intermediary represents and warrants that it has entered into an agreement with each Designated UI, if any, or shall enter into such an agreement before making the VVIF Portfolios available to a Designated UI, which agreements shall require the Designated UIs to: (a) accept Instructions only until the Market Close; (b) transmit Orders corresponding to such Instructions to the Intermediary as soon as practicable after receipt thereof; (c) maintain records sufficient to document the date and time of receipt of each such Instruction; and (d) enable the Intermediary to make its representations and warranties and comply with its obligations in Section 4(b) of this Agreement with respect to the Designated UI Internal Control Procedures. The Intermediary represents that it has in place arrangements reasonably designed to ensure the Underlying Intermediaries’ compliance with these provisions and will act in accordance with those arrangements. The Intermediary further agrees to notify Vanguard of any modifications or amendments to its agreements with the Underlying Intermediaries that may affect the obligations of the Underlying Intermediaries set forth in this Section 14.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

15.          Third Party Activities. Without limiting the liability of the Intermediary under this Agreement, the Intermediary shall be and remain fully responsible and liable for any actions by any third party through, or with respect to, the NSCC membership number in connection with which the Orders are transmitted hereunder (which membership number is identified on this Agreement), including without limitation any third party service provider permitted or directed by the Intermediary to access and/or act through or upon Fund/SERV with respect to such NSCC membership number and/or with respect to any of the Intermediary’s or the Accounts’ accounts in the VVI Funds or VVIF Portfolios. Any such third party shall be bound by the terms and conditions of this Agreement applicable to the Intermediary, and any failure by such third party to comply with the terms of this Agreement shall constitute a breach of this Agreement by the Intermediary. The Intermediary shall be and remain fully responsible and liable under this Agreement for all of the actions referenced in this Section 15 to the same extent that it would be if the Intermediary itself had taken such actions. Without limiting any of the foregoing, to the extent that the Intermediary fulfills any of its obligations hereunder through any third party, the Intermediary shall remain fully responsible and liable for the third party’s actions and omissions in connection therewith.

 

16.          Right to Inspect. With respect to all Orders transmitted to Vanguard through Fund/SERV pursuant to this Agreement, the Intermediary will maintain, or cause the Underlying Intermediaries to maintain, records sufficient to document the truth of the representations and warranties set forth in Sections 4(b) and 14 of this Agreement, as well as the performance of the obligations of the Intermediary set forth in this Agreement. The Intermediary agrees to promptly furnish Vanguard with such information as Vanguard may reasonably request from time to time in order for Vanguard to verify the Intermediary’s compliance with the provisions hereof (including, without limitation, periodic certifications confirming such compliance and/or the Intermediary’s furnishing or making available for Vanguard’s inspection records sufficient to document the Intermediary’s compliance with this Agreement).

 

17.          Authorized Persons.

 

(a)           For purposes of this Agreement, the Intermediary will designate “Authorized Persons” entitled to act on its behalf in connection with this Agreement. “Authorized Person” will mean any officer or employee of the Intermediary designated by providing Vanguard with the following: (i) a properly certified copy of a corporate resolution reflecting the vote of the Board of Directors of the Intermediary authorizing the officer or employee, directly or indirectly, to act in connection with this Agreement; and (ii) a specimen signature of such officer or employee. This requirement may be satisfied by the Intermediary furnishing Vanguard with a completed Vanguard Financial Advisor Services Organization Resolution form. Vanguard shall be entitled to act upon all instructions received from such Authorized Persons until it receives and has had a reasonable opportunity to act upon written notice from the Intermediary that such persons are no longer authorized to act. Vanguard may disregard any instructions not provided by an Authorized Person of the Intermediary.

 

(b)           Except as set forth in this Agreement or as otherwise agreed upon in writing by the parties, any communication or instruction made pursuant to this Agreement may be made orally, provided such oral communication is promptly confirmed in writing by facsimile or electronic transmission. The Intermediary is entitled to rely on any communications or instructions that it reasonably believes were provided to it by Vanguard. Vanguard is entitled to rely on any communications or instructions that it reasonably believes were provided to it by the Intermediary or its Authorized Persons.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

18.          Commencement, Amendment and Termination.

 

(a)           Commencement. Fund/SERV transactions between Vanguard and the Intermediary pursuant to this Agreement will not commence until both parties have acknowledged in writing that all necessary preliminary testing has been completed.

 

(b)           Amendment. This Agreement may be modified or amended from time to time by mutual written agreement of the parties; provided, however, that Vanguard in its sole discretion may modify the DCC&S Operating/Contingency Procedures, Attachment A, Exhibit A, and Exhibit B by 30 days’ advance written notice to the Intermediary. Schedule I to this Agreement may be updated by any written communication (including email) from the Intermediary to Vanguard upon written acknowledgement and acceptance (including email) by Vanguard.

 

(c)           Termination. This Agreement will continue in effect until terminated by either party by 60 days’ advance written notice to the other. Any such termination will not affect the completion of any pending Fund/SERV transactions or obligations, and will not affect the indemnities given under this Agreement. Notwithstanding the foregoing, Vanguard shall have the right to terminate this Agreement at any time without prior notice to the Intermediary in the event of excessive transactions or other abusive investment practices, as determined by Vanguard in its sole discretion. Upon any such termination, the Intermediary will immediately refrain from transmitting Orders to Vanguard through Fund/SERV.

 

19.          Non-exclusivity. Each party acknowledges that the other may enter into agreements similar to this Agreement with other parties for the performance of services similar to those to be provided under this Agreement, unless otherwise agreed to in writing by the parties.

 

20.          Conflicting Agreements. This Agreement (including any Exhibits, Attachments and Schedules hereto) constitutes the entire agreement between the parties as to the subject matter hereof and supersedes any and all agreements, representations and warranties, written or oral, regarding such subject matter made prior to the time at which this Agreement has been executed and delivered by the Intermediary and Vanguard, including, without limitation, any prior DCC&S agreement; provided, however, that the parties acknowledge that the Intermediary, Vanguard, Vanguard Marketing Corporation, and the VVI Fund have entered into a Participation Agreement of even date herewith (the “VVIF Participation Agreement”) concerning matters relating to the Accounts, the Policies and the VVI Fund, and the parties acknowledge and agree that this Agreement is in addition to, and does not supersede or replace, the VVIF Participation Agreement and that such agreement remains in full force and effect with respect to the subject matter thereof, except that to the extent that there is any conflict or inconsistency between the terms of this Agreement and the terms of the VVIF Participation Agreement, the terms of this Agreement shall govern and control. Nothing contained in this Agreement, however, will be construed to limit or restrict either party’s compliance with any law, regulation or order to which the party is subject, or to prevent the parties from supplementing this Agreement by agreeing to additional duties, obligations, representations, warranties or higher standards of care with respect thereto.

 

21.          Exhibits, Attachments and Schedules. All Exhibits, Attachments and Schedules attached to this Agreement, as they may be amended from time to time, are by this reference incorporated into and made a part of this Agreement.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

22.          Assignment. Neither Vanguard nor the Intermediary may assign this Agreement without the prior written consent of the other party, and any attempted assignment without such consent will be null and void.

 

23.          Cooperation. The parties agree to cooperate with each other in any recordkeeping or reporting necessary to fulfill any governmental or regulatory requirement. In addition, the Intermediary agrees to provide Vanguard with any of the records described in Section 4(b)(viii) promptly upon Vanguard’s request.

 

24.          Governing Law. This Agreement will be governed by and its provisions will be construed in accordance with the internal laws of the Commonwealth of Pennsylvania.

 

25.          Severability. If any provision of this Agreement is held to be invalid, the remaining provisions of this Agreement will continue to be valid and enforceable.

 

26.          Waiver. The failure of a party to insist upon strict adherence to any provision of this Agreement on any occasion will not be considered a waiver nor will it deprive such party of the right thereafter to insist upon strict adherence to that provision or any other provision of this Agreement.

 

27.          Notices. Any notice required or permitted hereunder will be in writing and will be given by personal service, mail or facsimile to the other party at the address set forth below (or such other address as the other party may specify by written notice to the first party). Notice will be effective upon receipt if by mail, on the date of personal delivery (by private messenger, courier service or otherwise), or upon receipt of facsimile, whichever occurs first, at:

 

Vanguard:                                         The Vanguard Group, Inc.

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▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: Principal, Financial Advisor Services Operations

Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇

 

Copy to:                                            The Vanguard Group, Inc.

Legal Department, V26

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Attention: Intermediary Agreements

Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇

 

Intermediary:                                    Massachusetts Mutual Life Insurance Company

▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.

▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: RS Fund Operations, MIP M200-INVST

Telephone: ▇▇▇-▇▇▇-▇▇▇▇

Fax No.: ▇▇▇-▇▇▇-▇▇▇▇

 

28.          Anti-Money Laundering Policies. To the extent applicable, the Intermediary agrees to comply with all anti-money laundering statutes, rules, regulations and guidance of government and/or self-regulatory organizations, including but not limited to, cash and suspicious activity reporting and recordkeeping requirements, and customer identification program requirements, as well as creation and implementation of policies, procedures and internal controls in order to ensure compliance. The Intermediary agrees that it will take reasonable steps to monitor investor transactions to identify currency, cash equivalents, possible money laundering and other suspicious activity and to report to government authorities reportable currency transactions, and where appropriate, suspicious activity.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

29.          Force Majeure. In the event a party is unable to perform its obligations under the terms of this Agreement because of acts of God, acts of terrorism, strikes, equipment failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages resulting from such failure to perform or otherwise from such causes.

 

30.          Interpretation. Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) “including” has the inclusive meaning frequently identified with the phrase “but not limited to”, and

 

(d) references to “hereunder” or “herein” relate to this Agreement. The section headings in this Agreement are for reference and convenience only and shall not be considered in the interpretation of this Agreement.

 

31.          Counterparts. This Agreement and any attachment, exhibit or schedule hereunder may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Any of the foregoing shall become binding when any two or more counterparts thereof, individually or taken together, bear the signatures of both parties hereto. For purposes hereof, a facsimile copy of any of the foregoing, including the signature pages hereto, shall be deemed an original.

 

[Remainder of page intentionally left blank]

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on their behalf by their duly authorized officers as of the date first written above.

 

 

 

	THE VANGUARD GROUP, INC.
	By:
	Title: FAS Department Head
	MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
	Name:
	By:
	Title:

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

SCHEDULE I

 

ACCOUNTS AND ASSOCIATED POLICIES

 

Name of Account	Policies Funded by Separate Account
Massachusetts Mutual Variable Life		Apex VULSM
Separate Account I
Established July 13, 1988

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

SCHEDULE II

 

(Updated and effective as of _________, 202_)

 

The following Portfolios of the Vanguard Variable Insurance Fund shall be made available as investments underlying the Variable Insurance Products, subject to the limitations set forth in Section 2.13(c) hereof:

 

Money Market Portfolio

Balanced Portfolio

Equity Index Portfolio

Equity Income Portfolio

Growth Portfolio

International Portfolio

Total Bond Market Index Portfolio

High-Yield Bond Portfolio

Short-Term Investment-Grade Portfolio

Capital Growth Portfolio

Diversified Value Portfolio

Total Stock Market Index Portfolio

Mid-Cap Index Portfolio

Real Estate Index Portfolio

Conservative Allocation Portfolio

Moderate Allocation Portfolio

Total International Stock Market Index Portfolio

Global Bond Index Portfolio

 

This Schedule B to the Participation Agreement dated ________ __, 20__ by and between the parties identified below is updated and effective as of _____________ __, 20__, and replaces all prior versions of this schedule.

 

This Schedule B may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. This Schedule B shall become binding when any two or more counterparts thereof, individually or taken together, bear the signatures of all parties hereto. For the purposes hereof, a facsimile copy of this Schedule B, including the signature pages hereto, shall be deemed an original.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

OPERATING AND CONTINGENCY PROCEDURES/

DEFINED CONTRIBUTION CLEARANCE & SETTLEMENT

 

A.

OPERATING PROCEDURES

 

1.            Trade Date Policy and Procedures. Orders for the purchase, redemption or exchange of VVIF Portfolio shares will be accorded a trade date (“T”) that is the date of receipt of the Instructions or Account transaction directions corresponding to the Order by the Intermediary or, subject to the requirements of Section 14 of the Agreement, a Designated UI, from the Policy owner or the Account, as appropriate, subject to the special rules provided in these DCC&S Operating/Contingency Procedures.

 

(a)           Receipt of Orders. Instructions and Account transaction directions corresponding to Orders must be received by the Intermediary or, subject to the requirements of Section 14 of the Agreement, a Designated UI, by the close of trading on the New York Stock Exchange (the “Market Close”) on T. Any Order corresponding to Instructions or Account transaction directions received by the Intermediary or a Designated UI after such time will be accorded a trade date that is the next Business Day following receipt of the Instructions or Account transaction directions (“T+1”), and the Intermediary will not enter the Order onto Fund/SERV until T+2.

 

(b)           Entry of Fund/SERV Transmissions. The Intermediary is responsible for sending all and only Orders corresponding to Instructions and Account transaction directions received prior to the Market Close on T to Vanguard through Fund/SERV by NSCC Cycle 7 on T+1 (received by Vanguard at approximately 7:00 a.m. Eastern time). Transactions may be entered in dollars or shares.

 

(c)           Correction of Fund/SERV Entries. The Intermediary may correct an erroneously entered

 

Order by first calling Vanguard’s NSCC Services Unit at (▇▇▇) ▇▇▇-▇▇▇▇ not later than 8:30 a.m. Eastern time on T+1. If required, a subsequent Fund/SERV entry may be submitted not later than NSCC Cycle 12 on T+1 (received by Vanguard at approximately 10:00 a.m. Eastern time); provided, however, that Vanguard reserves the right to reject any Fund/SERV correction for which the Intermediary has not provided Vanguard with documentation (if requested by Vanguard) sufficient, in Vanguard’s sole discretion, to prove the occurrence of the error.

 

(d)           As-of Orders. An Order (1) transmitted by the Intermediary via Fund/SERV indicating a trade date (the “Indicated Trade Date”) prior to the Business Day preceding the date of transmission to and receipt by Vanguard, or (2) submitted by the Intermediary via Fund/SERV after Cycle 12 on T+1 (each of the foregoing, an “As-of Order”) may, in Vanguard’s sole discretion, be processed by Vanguard as of the Indicated Trade Date on the As-of Order, subject to the following conditions, as applicable:

 

(i)           Automatic Processing. As-of Orders that satisfy each of the following conditions will be accepted and processed by Vanguard as of the Indicated Trade Date on the As-of Order:

 

(A)           The As-of Order was received by the Intermediary on the Indicated Trade Date in accordance with all applicable requirements under this Agreement;

 

(B)            The amount of the As-of Order does not exceed the lesser of (1) $25,000 and (2) the Large Transaction Amount for the relevant VVIF Portfolio;

 

(C)            The Indicated Trade Date is not more than one Business Day prior to the Business Day on which the As-of Order is received by Vanguard; and

 

(D)           The Intermediary transmits the As-of Order with one of the following NSCC As-Of Reason Codes (“As-of Reason Codes”): (01) Incorrect Firm/Fund Account Number; (02) Incorrect Share Quantity/Dollar Quantity; (03) Incorrect Security Issue ID; (05) Incorrect Sales Charge Breakpoint; (07) Blue Sky Violation; (09) Delay in Firm Trade Transmission; (13) Distribution Reversal (only when applied in connection with an Additional Purchase or a Partial Liquidation); or (14) Prospectus Violation (only when applied

in connection with a Firm Exit).

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(ii)           Discretionary Processing. The Intermediary shall notify Vanguard of its intent to transmit an As-of Order that falls within any of the categories listed below, and/or of its intent to transmit more than one As-of Order on a single Business Day, by calling Vanguard’s NSCC Services Unit between 6:30 a.m. and 8:30 p.m. Eastern time on the Business Day on which such As-of Order(s) is (are) transmitted to Vanguard. Any such As-of Order(s) will be suspended by Vanguard upon receipt and will be processed as of the Indicated Trade Date only if (x) the Intermediary has provided the required notification and (y) Vanguard approves the As-of Order(s) upon review, subject to the requirements of Section 1(d)(iii) below.

 

(A)           As-of Orders for Closed Funds;

 

(B)           As-of Orders in an amount equal to or greater than the lesser of (1) $25,000 and (2) the Large Transaction Amount for the relevant VVIF Portfolio;

 

(C)           As-of Orders with an Indicated Trade Date more than one Business Day prior to the Business Day on which the As-of Order is received by Vanguard; and

 

(D)           As-of Orders with an As-of Reason Code of: (10) With Fund’s Permission; (11) Resubmitted Fund/SERV Reject; or (12) DCC&S (See Asset Type Indicator).

 

Any such As-of Orders received by Vanguard on a Business Day between NSCC Cycles 8 and 14 will be reviewed and either approved or disapproved by 1:00 p.m. Eastern time on such Business Day, after which time the Intermediary will be notified of any rejected As-of Orders through the normal confirmation process. Any such As-of Orders received by Vanguard on a Business Day between NSCC Cycles 15 and 98 will be reviewed and either approved or disapproved by 10:00 A.M. Eastern time on the following Business Day, after which time the Intermediary will be notified of any rejected As-of Orders through the normal confirmation process.

 

(iii)           Additional Documentation. In connection with any As-of Order transmitted by the Intermediary pursuant to Section 1(d)(ii) above, Vanguard may request additional documentation from the Intermediary in connection with its review process. Such documentation may include evidence of the date and time of receipt of the Instructions or Account transaction directions corresponding to the original Order from the Policy owner or Account, as appropriate, a letter of indemnification from the Intermediary, and/or an affidavit from the Policy owner, Account, or a representative of the Intermediary as to the facts supporting the As-of Order. Vanguard must receive any documentation requested from the Intermediary via facsimile to (▇▇▇) ▇▇▇-▇▇▇▇ not later than 9:00 p.m. Eastern time on the transmission date of the As-of Order.

 

(iv)         Rejection of As-of Orders. The following As-of Orders shall be rejected by

Vanguard:

 

(A)          Any As-of Order submitted by the Intermediary that does not meet the requirements set forth in Section 1(d)(i) above and that is not approved by Vanguard pursuant to Section 1(d)(ii) above;

 

(B)           Any As-of Order that includes an Indicated Trade Date that is 61 or more calendar days prior to the Business Day on which Vanguard receives such As-of Order;

 

(C)           Any As-of Order requiring Intermediary notification pursuant to Section 1(d)(ii) above for which notification is not provided (rejected on the Business Day after receipt by Vanguard);

 

(D)          Any As-of Order requiring additional documentation from the Intermediary pursuant to Section 1(d)(iii) above for which appropriate documentation is not timely provided (rejected on the Business Day after receipt by Vanguard); and

 

(E)            Any As-of Order that includes an As-of Reason Code of (04) Customer Renege; (13) Distribution Reversal (when applied in connection with anything other than an Additional Purchase or a Partial Liquidation); or (14) Prospectus Violation (when applied in connection with anything other than a Firm Exit).

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(v)          Settlement of As-of Orders. Any As-of Order received, approved (if required) and processed by Vanguard pursuant to Sections 1(d)(i) or 1(d)(ii) shall settle via the NSCC (A) on the next Business Day, if received and approved by Vanguard prior to 8:00 p.m. Eastern time on a Business Day, or (B) on the second following Business Day, if received and approved by Vanguard after 8:00 p.m. Eastern time on a Business Day.

 

(vi)         Reimbursement of As-of Impact. The Intermediary’s transmission to Vanguard of an As-of Order with an Indicated Trade Date more than two Business Days prior to the transmission date shall constitute the Intermediary’s agreement to reimburse Vanguard for any negative impact to the affected VVIF Portfolio that (A) results from Vanguard’s processing of such As-of Order as of the Indicated Trade Date and (B) is equal to or greater than $250 (the “As-of Impact”). Vanguard will notify the Intermediary of any As-of Impact as soon as practicable after Vanguard’s receipt, and prior to Vanguard’s processing, of such As-of Order.

 

(vii)        Suspension of As-of Privilege. Vanguard reserves the right to suspend the Intermediary’s ability to transmit As-of Orders at any time, without prior notice to the Intermediary, if Vanguard determines, in its sole discretion, that the Intermediary has engaged in excessive or abusive as-of trading, has failed to reimburse As-of Impact within 30 days of assessment, has failed to meet the applicable requirements set forth in this Section 1(d), or is otherwise in breach of the terms of this Agreement. Effective upon any such suspension, As-of Orders transmitted by the Intermediary will be systematically rejected by Vanguard.

 

(e)           Errors not Timely Corrected and Delayed Entries. Any error or delay in transmitting an Order that is caused by the Intermediary or an Underlying Intermediary and that is not corrected in accordance with Part A, Sections 1(c) or 1(d) of these Operating Procedures, will be handled as described in Section 7(c) of the Agreement.

 

(f)           Resubmission of Certain Orders. Any Order timely entered onto Fund/SERV by the Intermediary which is rejected by either Vanguard or the NSCC (other than as a result of an NSCC Outage, as defined below) may, in Vanguard’s sole discretion, be accorded a trade date (and corresponding trade price) that is the date of receipt of the Instructions or Account transaction directions corresponding to such Order by the Intermediary (T) if all of the following conditions are satisfied:

 

(i)           The Intermediary calls Vanguard not later than 8:30 a.m. Eastern time on T+1 to notify Vanguard of its intent to resubmit the Order on T+1;

 

(ii)          Upon receipt of such notification, Vanguard authorizes the Intermediary to

resubmit such Order;

 

(iii)          Such Order is resubmitted on T+1 via NSCC Cycle 12 and is received by Vanguard not later than 10:00 a.m. Eastern time on T+1; and

 

(iv)          If such Order was rejected by the NSCC for system-related reasons, the Intermediary shall submit such Order to Vanguard via facsimile to (▇▇▇) ▇▇▇-▇▇▇▇, and such facsimile shall be received by Vanguard not later than 10:00 a.m. Eastern time on T+1.

 

All such resubmitted Orders that are accepted by Vanguard shall settle in accordance with the settlement procedures set forth herein. Notwithstanding the foregoing, Vanguard reserves the right to reject any purchase Order, and to delay settlement of or redeem in kind any redemption Order, resubmitted on T+1 with an intended trade date (and trade price) of T if Vanguard, in its sole discretion, deems such Order to be disruptive or detrimental to the applicable VVIF Portfolio. Any purchase Order so rejected will be accorded a trade date of T+1, subject to applicable Extraordinary Event limitations set forth in the Agreement.

 

2.            Settlement Policy and Procedures. will occur on a T+1 basis, in same day funds, through Settlement for all Orders effected pursuant to this Agreement the NSCC, unless an Order is submitted manually, in which case settlement of purchase Orders will occur on a T+1 basis and settlement of redemption Orders will occur on a T+2 basis, in each case by wire transfer in accordance with the procedures set forth below. All NSCC settlements will be subject to the rules and procedures of the NSCC, including such rules or procedures as may concern the payment of interest on failed settlements.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

3.            Firm Exits. A Firm Exit transaction transmitted to Vanguard by the Intermediary via Fund/SERV (a “Firm Exit”) relating to an Order previously transmitted by the Intermediary via Fund/SERV (the “Original Order”) may, in Vanguard’s sole discretion, be accepted and processed, with the effect of canceling the Original Order, subject to the following conditions, as applicable:

 

(a)           Automatic Processing. Firm Exits that satisfy each of the following conditions will be accepted and processed by Vanguard:

 

(i)           The Original Order was incorrect as a result of the Intermediary’s error;

 

(ii)           The Firm Exit identifies the Original Order to which it relates;

 

(iii)         The amount of the Firm Exit is less than the Large Transaction Amount for the relevant VVIF Portfolio; and

 

(iv)         The Firm Exit is received by Vanguard prior to NSCC settlement of the Original Order.

 

Any Firm Exit transmitted by the Intermediary after NSCC settlement of the Original Order shall be rejected by the NSCC.

 

(b)           Discretionary Processing. The Intermediary shall notify Vanguard of its intent to transmit a Firm Exit that falls within either of the categories listed below by calling Vanguard’s NSCC Services Unit between 6:30 a.m. and 8:30 p.m. Eastern time on the Business Day on which such Firm Exit(s) is (are) transmitted to Vanguard. Any such Firm Exit(s) will be suspended by Vanguard upon receipt and will be approved and processed only if (x) the Intermediary has provided the required notification and (y) Vanguard approves the Firm Exit(s) upon review, subject to the requirements of Section 3(c) below.

 

(i)           A Firm Exit in an amount equal to or greater than the Large Transaction Amount for the relevant VVIF Portfolio; or

 

(ii)           Multiple Firm Exits in the same VVIF Portfolio transmitted on the same Business Day which aggregate to an amount equal to or greater than the Large Transaction Amount for the relevant VVIF Portfolio.

 

Any such Firm Exit(s) received by Vanguard on a Business Day between NSCC Cycles 8 and 14 and relating to an Original Order with a trade date of the immediately preceding Business Day will be reviewed and either approved or disapproved by 1:00 p.m. Eastern time on such Business Day, after which time Vanguard will notify the Intermediary by telephone of the decision. Any such Firm Exits received by Vanguard on a Business Day between NSCC Cycles 15 and 98 and relating to an Original Order with a trade date of such Business Day will be reviewed and either approved or disapproved by 10:00 A.M. Eastern time on the following Business Day, after which time Vanguard will notify the Intermediary by telephone of the decision.

 

(c)           Additional Documentation. In connection with any Firm Exit transmitted by the Intermediary and described in Section 3(b) above, Vanguard may request additional documentation from the Intermediary in connection with its review process. Such documentation may include evidence of the date and time of receipt of the Instructions or Account transaction directions corresponding to the Original Order from or on behalf of the Policy owner or Account, as appropriate, a letter of indemnification from the Intermediary, and/or an affidavit from the Policy owner, Account, or a representative of the Intermediary as to the facts supporting the Firm Exit. Vanguard must receive any documentation requested from the Intermediary via facsimile to (▇▇▇) ▇▇▇-▇▇▇▇ not later than 9:00 p.m. Eastern time on the transmission date of the Firm Exit.

 

FAS/[COMPANY]
DEFINED CONTRIBUTION CLEARANCE
& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

(d)           Rejection of Firm Exits. The following Firm Exits may be rejected by Vanguard by notification to the Intermediary, regardless of the fact that such Firm Exit is received by Vanguard and is reflected in the NSCC Settlement for the relevant date:

 

(i)           Any Firm Exit submitted by the Intermediary that does not meet the requirements set forth in Section 3(a) above and that is not approved by Vanguard pursuant to Section 3(b) above;

 

(ii)           Any Firm Exit requiring Intermediary notification pursuant to Section 3(b) above for which notification is not provided (rejected on the Business Day after receipt by Vanguard); and

 

(iii)          Any Firm Exit requiring additional documentation from the Intermediary pursuant to Section 3(c) above for which appropriate documentation is not timely provided (rejected on the Business Day after receipt by Vanguard).

 

(e)          Settlement of Certain Firm Exits.

 

(i)            Any Firm Exit received and processed by Vanguard pursuant to Section 3(a) or Section 3(b) shall be reflected in the NSCC settlement occurring on the Business Day immediately following the trade date of the Original Order.

 

(ii)          Any Firm Exit approved by Vanguard pursuant to Section 3(b) or rejected by Vanguard pursuant to Section 3(d) may require the Intermediary’s reimbursement of Firm Exit Impact (as defined below) or a supplemental manual settlement, as follows:

 

(A)           Reimbursement of Firm Exit Impact. The Intermediary’s transmission to Vanguard of a Firm Exit described in Section 3(b) or 3(d) above shall constitute the Intermediary’s agreement to reimburse Vanguard for any negative impact to the affected VVIF Portfolio that (1) results from Vanguard’s processing of such Firm Exit and (2) is equal to or greater than $250 (the “Firm Exit Impact”). Vanguard will notify the Intermediary of any Firm Exit Impact as soon as practicable after Vanguard’s receipt of such Firm Exit.

 

(B)           Supplemental Manual Settlement. Notwithstanding any prior NSCC settlement reflecting a Firm Exit, if Vanguard reasonably determines that a Firm Exit described in Sections 3(b) or 3(d) should not be honored as a legal matter or as a matter of Vanguard policy, Vanguard will notify the Intermediary, promptly after such determination, of the reinstatement of the Original Order, as of its original trade date, and such Original Order will be settled by Vanguard and the Intermediary in accordance with the provisions of Section 6 below.

 

(f)           Review of Firm Exit Privilege. Vanguard reserves the right to review the Intermediary’s use of the Firm Exit privilege described in this Section 3 in order to determine whether the Intermediary has engaged in excessive or abusive Firm Exit trading, has failed to reimburse Firm Exit Impact or complete supplemental settlements where required, has failed to meet the applicable requirements set forth in this Section 3, or is otherwise in breach of the terms of this Agreement. In any such case, Vanguard may terminate this Agreement pursuant to the applicable termination provisions.

 

4.             New Accounts. In order to establish a new account in the VVIF Portfolios, the Intermediary will transmit account registration information via Fund/SERV to Vanguard in the established NSCC format or, if the new account is not established through the NSCC, the Intermediary will provide Vanguard with all information necessary or appropriate to establish and maintain such account (and any subsequent changes to such account) via Vanguard’s account registration form and any other applicable Vanguard forms. For any new account established through the NSCC, the Intermediary will also complete and submit to Vanguard the Firm Information Form, attached to this Agreement as Exhibit A, with respect to the Intermediary or the Account, as appropriate. The account registration information is required one Business Day in advance of the initial purchase. In addition, where the new account is opened in the name of an Account, under that Account’s taxpayer identification number, the Intermediary will immediately mail Vanguard hard copy documentation of the foregoing in the form required by Vanguard. With respect to any omnibus accounts, or any other accounts which the Intermediary controls, the Intermediary shall complete master account registration documentation for each taxpayer identification number; that documentation shall apply to all identically registered accounts to which the taxpayer identification numbers apply. The Intermediary may not transmit any Orders to Vanguard through Fund/SERV, unless and until the Intermediary has established the accounts to which such Orders relate as provided herein. As used herein, “new account” means an account with a different registration than any existing account of the

Intermediary or any Account.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

5.            Manual Settlement Procedures.

 

(a)           Manual Purchases. Subject to the terms and conditions set forth herein, in the case of any purchase Order for shares of a VVIF Portfolio that is transmitted to Vanguard by the Intermediary other than through Fund/SERV in accordance with all applicable requirements of this Agreement (a “Manual Purchase”), Vanguard shall credit the Intermediary’s account with the purchase of such shares on a Delayed Settlement basis.

 

(b)           Manual Redemptions. Subject to the terms and conditions set forth herein, in the case of any redemption Order for shares of a VVIF Portfolio that is transmitted to Vanguard by the Intermediary other than through Fund/SERV in accordance with all applicable requirements of this Agreement (a “Manual Redemption”), Vanguard shall debit the Intermediary’s account in the number of shares covered by such redemption Order on a Delayed Settlement basis.

 

For these purposes, “Delayed Settlement” shall mean that, as applicable, (i) shares of a VVIF Portfolio may be credited to the Intermediary’s account at the share price calculated on the date of the Intermediary’s receipt of the Instructions or Account transaction directions corresponding to the purchase Order (T) notwithstanding the fact that Vanguard will not receive the settlement proceeds for the Purchase Amount of such Manual Purchase until the next Business Day following the Intermediary’s receipt of such Instructions or Account transaction directions (T+1), or (ii) shares of a VVIF Portfolio may be redeemed from the Intermediary’s account at the share price calculated on the date of the Intermediary’s receipt of the Instructions or Account transaction directions corresponding to the redemption Order (T) notwithstanding the fact that Vanguard will not deliver the settlement proceeds for the Redemption Amount until the second Business Day after the Intermediary’s receipt of such Instructions or Account transaction directions (T+2). “Purchase Amount” shall mean, with respect to any Manual Purchase, the total dollar value of shares to be purchased (including any applicable purchase or transaction fees). “Redemption Amount” shall mean, with respect to any Manual Redemption, the total dollar value of shares to be redeemed (including any applicable redemption or transaction fees).

 

(c)           Wiring of Funds. The Intermediary shall remit the Purchase Amount to Vanguard by Federal Funds wire by 4:00 p.m. Eastern time on T+1 in accordance with the wire instructions set forth below. Vanguard shall remit the Redemption Amount to the Intermediary by Federal Funds wire by 4:00 p.m. Eastern time on T+2 in accordance with the wire instructions set forth below.

 

(d)           Failed Trades. In the event that a Manual Purchase results in a Failed Trade (as hereinafter defined), Vanguard reserves the right, in its sole discretion, to cancel such Manual Purchase or the portion thereof that represents the Failed Trade. The Intermediary shall reimburse each VVIF Portfolio affected by a Failed Trade for any and all losses that it suffers as a result of such Failed Trade, including, but not limited to, any market losses. At a minimum, losses resulting from a Failed Trade shall be deemed to include an amount calculated as (x) the Purchase Amount minus the amount of any Federal Funds wire timely received by Vanguard in connection with the Failed Trade, multiplied by (y) the Federal Funds Effective Rate on the day of the Failed Trade, multiplied by (z) 1/360. For these purposes, “Federal Funds Effective Rate” shall mean the average federal funds rate, as computed by the Federal Reserve Bank of New York.

 

(i)            A Failed Trade shall mean any Manual Purchase or portion thereof with respect to which Vanguard has not received the Purchase Amount in the form of a Federal Funds wire by 4:00 p.m. Eastern Time on T+1. “Federal Funds” shall mean monies credited to a VVIF Portfolio’s transfer agent bank by a Federal Reserve Bank.

 

(ii)           Vanguard may determine, in its sole discretion, that a Failed Trade did not result from the Intermediary’s action or omission. In the event that such a determination is made, Vanguard may elect to waive all or part of the reimbursement described above.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)
0458058

 

 

(e)           Additional Limitations on Delayed Settlement. Delayed Settlement shall be subject to the following additional provisions:

 

(i)            With respect to any Manual Purchase, only the Purchase Amount designated when placing the Manual Purchase shall be credited to the Intermediary’s account on a Delayed Settlement basis. Any amount received by Vanguard in excess of the Purchase Amount shall be handled as directed by the Intermediary upon notice from Vanguard.

 

(ii)           With respect to any Failed Trade, if a portion of the Purchase Amount is timely received by Vanguard (i.e., in the form of a Federal Funds wire by 4:00 p.m. Eastern Time on T+1), then the amount so received shall be credited to the Intermediary’s account on a Delayed Settlement basis.

 

(iii)          Notwithstanding any other provision of this Agreement, in the case of any Manual Purchase or portion thereof that has been deemed a Failed Trade, any portion of the Purchase Amount thereafter received by Vanguard shall be handled as directed by the Intermediary upon notice from Vanguard.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(f)            Wire Instructions.

 

VANGUARD:

 

Wire to:		FRB ABA ▇▇▇▇▇▇▇▇▇
		HSBC, New York
For Credit		Account: 000112046
to:		Vanguard Incoming Wire Account
In favor of:		NSCC ID #

		Attn NSCC Unit x 19464
		Registration Name
INTERMEDIARY:
		ABA Routing # ▇▇▇▇▇▇▇▇▇
		CitiBank, N.A.
		New York, N.Y.
		Account: ▇▇▇▇▇▇▇▇
		MassMutual, FA Clearing
		Registration Name

 

B.

CONTINGENCY PROCEDURES

 

1.            Intermediary Outages. In the case of any interruptions to the transmission or receipt of Orders through Fund/SERV that are due to problems or errors at the Intermediary (an “Intermediary Outage”), the following procedures shall be followed:

 

(a)            The Intermediary shall immediately notify Vanguard’s NSCC Services Unit at (▇▇▇) ▇▇▇-▇▇▇▇ of the Intermediary Outage.

 

(b)            If the Intermediary will not be able to submit Orders to Vanguard by NSCC Cycle 7 on T+1 (received by Vanguard at approximately 7:00 a.m. Eastern time), the Intermediary will call Vanguard’s NSCC Services Unit at (▇▇▇) ▇▇▇-▇▇▇▇ not later than 8:30 a.m. Eastern time on T+1 in order to notify Vanguard of the Intermediary Outage and to provide aggregated net purchase or redemption information, by VVIF Portfolio, with respect to the Orders corresponding to Instructions and Account transaction directions received on T. If possible, the Intermediary will submit the Orders corresponding to Instructions and Account transaction directions received on T, that could not previously be transmitted via Fund/SERV, via NSCC Cycle 12 on T+1 (received by Vanguard at approximately 10:00 a.m. Eastern time); otherwise, the Intermediary will submit such Orders, with all appropriate details, via facsimile to (▇▇▇) ▇▇▇-▇▇▇▇ not later than 10:00 a.m. Eastern time on T+1.

 

(c)            If any correction or termination of the Intermediary Outage results in the duplicate transmission via Fund/SERV of Orders previously submitted to Vanguard via the manual process outlined in Part B, Section 1(b) above, the Intermediary will be responsible for any costs or losses associated with the cancellation of such duplicate Orders unless the Intermediary calls Vanguard’s NSCC Services Unit at (▇▇▇) ▇▇▇-▇▇▇▇ not later than 10:00 a.m. Eastern time on T+1 and provides sufficient information with respect to the duplicated Orders to enable Vanguard to cancel the manually submitted Orders. In such event, the Orders transmitted via Fund/SERV, if timely received by Vanguard, shall be processed by Vanguard in accordance with its usual procedures set forth in Part A.

 

2.            NSCC Outages. In the case of any interruptions to the transmission or receipt of Orders through Fund/SERV that are due to problems or errors at the NSCC (an “NSCC Outage”), the following procedures shall be followed:

 

FAS/[COMPANY]

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0458058

 

 

(a)           The Intermediary or Vanguard shall notify the other immediately upon becoming aware of an NSCC Outage.

 

(b)           If the Intermediary reasonably believes that it will not be able to submit Orders to Vanguard by NSCC Cycle 7 on T+1, the Intermediary will call Vanguard’s NSCC Services Unit at (▇▇▇) ▇▇▇-▇▇▇▇ not later than 8:30 a.m. Eastern time on T+1 in order to in order to notify Vanguard of the NSCC Outage and to provide aggregated net purchase or redemption information, by VVIF Portfolio, with respect to the Orders corresponding to Instructions and Account transaction directions received on T. If possible, the Intermediary will submit the Orders corresponding to Instructions and Account transaction directions received on T, that could not previously be transmitted via Fund/SERV, via NSCC Cycle 12 on T+1 (received by Vanguard at approximately 10:00 a.m. Eastern time); otherwise, the Intermediary will submit such Orders, with all appropriate details, via facsimile to (▇▇▇) ▇▇▇-▇▇▇▇ not later than 10:00 a.m. Eastern time on T+1.

 

(c)            If any correction or termination of the NSCC Outage may result in the duplicate transmission via Fund/SERV of Orders previously submitted to Vanguard via the manual process outlined in Part B, Section 2(b) above (i.e., if Orders previously entered onto Fund/SERV by the Intermediary were suspended as a result of the NSCC Outage), the Intermediary will be responsible for any costs or losses associated with the cancellation of duplicate Orders unless the Intermediary calls Vanguard’s NSCC Services Unit at (▇▇▇) ▇▇▇-▇▇▇▇ not later than 10:00 a.m. Eastern time on T+1 and provides sufficient information with respect to the potentially duplicated Orders to enable Vanguard to cancel the manually submitted Orders. In such event, the Orders transmitted via Fund/SERV, if timely received by Vanguard, shall be processed by Vanguard in accordance with its usual procedures set forth in Part A.

 

3. Vanguard Outages. In the case of any interruptions to the transmission or receipt of Orders through Fund/SERV that are due to problems or errors at Vanguard (a “Vanguard Outage”), the following procedures shall be followed:

 

(a)            The Intermediary shall continue to transmit Orders via Fund/SERV in accordance with the procedures outlined in the Operating Procedures in Part A above.

 

(b)            Vanguard will be responsible for any costs or losses associated with processing and settling, as of the appropriate trade date, Orders timely entered onto Fund/SERV by the Intermediary during the Vanguard Outage.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

ATTACHMENT A

 

[Current fund information table to be inserted]

 

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

EXHIBIT A

 

FIRM INFORMATION FORM

 

Important information about opening a new account: Vanguard is required by federal law to obtain from each person who opens an account certain personal information—including name, address, and date of birth among other information—that will be used to verify identity. If you do not provide us with this information, we will not be able to open the account. If we are unable to verify your identity, Vanguard reserves the right to close your account or take other steps we deem reasonable.

 

(Please print, preferably in black ink.)

 

1. Name of Firm: _____________________________________________________________________________________________

 

Firm’s Nominee Name(s) (if applicable): ____________________________________________________________________________

 

___________________________________________________________________________________________________________

 

2. Firm Information

 

Citizenship: □ U.S. Citizen or □ Resident Alien or □ Nonresident Alien ______________________________________

Country of citizenship for nonresident alien

 

______________________________________________________ □ Applied for.

Employer Identification Number, or Qualified                                   Date of application: ______________________

Intermediary Employer Identification Number

(if a non-U.S. entity)

 

Street Address or APO/FPO (a P.O. box or rural route number is not acceptable)

 

City		State		Zip Code
Telephone Number

 

[FORM CONTINUES ON NEXT PAGE]

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

▇. Type of Organization

  

Important: Please (1) indicate below the organization type that describes the firm identified in Section 1 above and (2) send us, along with this form, a copy of the documentation required below for the organization type indicated, or there may be a delay in establishing the account or account options.

 

Organization Type		Documents Required
¨ Corporation		Articles of Incorporation or state-issued charter or Certificate of Good Standing.
¨ Endowment		Pages in trust document that show the name of the endowment and a listing of all trustees and their signatures.
¨ Foundation		Articles of Incorporation.
¨ Partnership		Partnership Agreement.
¨ Professional Association or
Corporation; Limited Liability Corporation		Articles of Association, Certificate of Organization, or similar document.
¨ Sole Proprietorship		Document filed to form the proprietorship.
¨ Unincorporated Enterprise		Document evidencing the existence of the enterprise, such as the charter or resolution.
¨ Other		Document filed to form the organization (if a legal entity), or organization

 

_________________________ bylaws or similar document (if not a legal entity).

(Please specify type.)

 

Check one of the following if it describes the firm identified in Section 1 above:

 

¨ Broker/Dealer	¨ National Bank	¨ Government Agency or Instrumentality
¨ Mutual Fund	¨ State-Regulated Bank	¨ Publicly Traded on the Nasdaq (Except Small-Cap Issues), NYSE, or AMEX
		(Enter ticker symbol.)

 

4. Names and Signatures of Authorized Signers

 

The undersigned hereby certify that they are authorized to act on behalf of the Firm and that all information provided on this Firm Information Form is true, correct, and complete.

 

 

▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Name
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇		June 19, 2020
Signature/Title		Date
Name
Signature/Title		Date

 

Please fax this form, together with all documentation required hereunder, to OTG Implementation Services at ▇▇▇-▇▇▇-▇▇▇▇.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

EXHIBIT B

 

MONEY MARKET FUND PROCEDURES

 

I.

Money Market Fund Eligibility.

 

A.            Eligibility Policies and Procedures. Attachment A, as it may be modified by Vanguard from time to time, identifies all Retail MMFs offered by Vanguard. The Intermediary agrees that it or the Underlying Intermediary, if any, will:

 

(1)           adopt policies and procedures reasonably designed to limit beneficial owners of Retail MMFs to natural persons, as such terms are defined in Rule 2a-7, and as further clarified in the Rule’s adopting release and any SEC staff guidance modifying the rule, from time to time;

 

(2)           take commercially reasonable efforts to ensure that all current and future beneficial owners of such Retail MMF shares are natural persons;

 

(3)           maintain documentation sufficient to demonstrate that a natural person beneficially owns each Account held in a Retail MMF (Annex A sets forth the types of documentation sufficient to determine that a natural person beneficially owns an Account held in a Retail MMF);

 

(4)           promptly redeem any Retail MMF shares of Plans who do not qualify as natural persons, or, in the event the Intermediary or the Underlying Intermediary cannot redeem shares held by ineligible Plans, promptly notify Vanguard and comply with any requests from Vanguard relating to the involuntary redemption of such shares; and

 

(5)           upon reasonable request of Vanguard, provide copies or a summary of the policies, procedures and internal controls required under subsection A.(1) above and information or certification as to the adequacy of such procedures and the effectiveness of their implementation, in such form as may be reasonably satisfactory to Vanguard.

 

B.            NSCC Social Codes. The Intermediary agrees that it will enter an appropriate NSCC social code for each Account in a Retail MMF maintained with Vanguard. Vanguard will reject any request to establish an Account in a Retail MMF for which an Institutional NSCC social code has been provided.

 

(1)           NSCC Retail social codes shall be used by the Intermediary to designate individual, non-omnibus accounts, trust accounts or accounts of certain retirement plans that meet the eligibility requirements under the Rule.

 

(2)           NSCC Retail/Institutional social codes shall be used by the Intermediary to designate omnibus accounts where the Intermediary or Underlying Intermediary, if any, shall be responsible for looking through to the underlying Plans and making the appropriate classification as to their eligibility to invest in Retail MMFs.

 

(3)           Accounts with NSCC Institutional social codes shall not be permitted to be maintained in the Retail MMFs.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

II.            Liquidity Fees and Redemption Gates.

 

A.            Notification of Fees and Gates. Vanguard will provide notice of the imposition of a liquidity fee or redemption gate by posting an announcement on ▇▇▇▇▇▇▇▇.▇▇▇ as well as by sending an electronic message to any operational e-mail address(es) previously provided by the Intermediary. The Intermediary shall be responsible for providing Vanguard with any updates to its operational e-mail address(es). Corrective activity, such as as-of trades and adjustments, shall not be permitted by Vanguard during the time period when a redemption gate is in effect for a Retail MMF. The following transaction types will not be impacted if a liquidity fee or redemption gate is in effect for a Retail MMF: Share class conversions; Omnibus dividend reconciliation; Omnibus short-term capital gains reconciliation; Omnibus long-term capital gains reconciliation.

 

B.            Imposition of Liquidity Fees and Redemption Gates. The Intermediary may determine whether liquidity fees and redemption gates are administered by Vanguard or by the Intermediary or Underlying Intermediary, if any, by utilizing the NSCC’s Money Market Liquidity Fee-Redemption Gate Indicator, Transaction Received Time and Date and Aggregated Order Indicator fields (the “NSCC Indicator fields”), as found in the Fund/SERV® and DCC&S files pursuant to DTCC Important Notice a8159.

 

(1)           If the NSCC Indicator fields will be used by the Intermediary, data must be supplied for each of the Liquidity Fee-Redemption Gate Indicator, Transaction Received Time and Date and Aggregated Order Indicator fields. Annex B contains the combinations of NSCC Indicator fields that will be accepted by Vanguard and the outcomes under each of those combinations. Certain combinations of the NSCC Indicator fields may cause Vanguard to reject a trade (such as where Vanguard is indicated as the party responsible for assessing a liquidity fee or redemption gate and transactions are submitted net of purchases and redemptions).

 

(a)           If the indicator on a Retail MMF trade is set to “B,” the Intermediary or Underlying Intermediary, if any, will be responsible for applying any liquidity fees or redemption gates imposed by a Retail MMF.

 

(b)          If the indicator on a Retail MMF trade is set to “F,” Vanguard will be responsible for applying any liquidity fees or redemption gates imposed by a Retail MMF.

 

(2)           In the event that the Intermediary does not use the use the NSCC Indicator fields to designate the party responsible for applying any liquidity fees or redemption gates imposed by a Retail MMF, then the terms of the Intermediary’s existing Vanguard Fund trading agreement governing redemptions fees will dictate the party responsible for such application.

 

(3)           If Vanguard is responsible for the application of any liquidity fees or redemption gates, then Accounts will be maintained by the Intermediary or Underlying Intermediary, if any, as:

 

(a)           Non-omnibus accounts representing the holdings of a single Plan of the Intermediary or Underlying Intermediary. For any non-omnibus Accounts representing the holdings of a single Plan, the Intermediary agrees that it or any Underlying Intermediary will, in each case,

 

(i)             submit separate aggregate purchase and redemption orders on behalf of each Plan for shares of such Retail MMF, without netting any purchase or exchange-in order(s) against any one or more redemption or exchange-out order(s) for such Retail MMF; and

 

(ii)             provide, upon Vanguard’s reasonable request, information in an industry standard format separating Plan and Plan participant Orders received before and after the time when a Retail MMF imposed, lifted, or modified a liquidity fee or redemption gate.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

(b)         Omnibus accounts representing the holdings of multiple Plans of the Intermediary or Underlying Intermediary. For any omnibus accounts in a Retail MMF, the Intermediary agrees that it or any Underlying Intermediary will, in each case,

 

(i)             submit separate aggregate purchase and redemption orders for shares of such Retail MMF, without netting any purchase or exchange-in order(s) against any one or more redemption or exchange-out order(s) for such Retail MMF.

 

(ii)            provide, or cause any Underlying Intermediary to provide, upon Vanguard’s reasonable request, information in an industry standard format separating Plan and Plan participant Orders received before and after the time when a Retail MMF imposed, lifted, or modified a liquidity fee or redemption gate.

 

(4)           For any Accounts for which the Intermediary, or Underlying Intermediary, if any, is responsible for applying liquidity fees or redemption gates, the Intermediary or Underlying Intermediary agrees to:

 

(a)           promptly take such actions reasonably requested by a Retail MMF or Vanguard to impose, lift or modify a liquidity fee or redemption gate;

 

(b)           reject any redemption or exchange out Orders received during a time period that a redemption gate has been imposed by a Retail MMF; and

 

(c)           prevent any Underlying Intermediary that is unable to impose a liquidity fee or redemption gate from purchasing or holding shares of any Retail MMF that may charge a liquidity fee or impose a redemption gate unless the Intermediary has assumed that obligation.

 

C.           Payment of Liquidity Fees. Liquidity fees shall be due and payable on the second business day following the date of the trade(s) subject to the liquidity fee (T+ 2). If the Intermediary or Underlying Intermediary, if any, is responsible for the application of liquidity fees, then on the first business day following the date of the trade(s) subject to the liquidity fee (T+ 1), the Intermediary will provide Vanguard with an estimate of the fees to be remitted prior to the next scheduled NAV calculation by contacting your Vanguard Client Account Management Team by email at ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇.

 

(1)           If the Intermediary or Underlying Intermediary, if any, is responsible for the application of liquidity fees, payment shall be made by wire pursuant to the below instructions. On the same business day as each wire transfer of liquidity fees, the Intermediary shall fax to ▇▇▇-▇▇▇-▇▇▇▇ a spreadsheet indicating the allocation of the fees remitted, which shall include the Vanguard fund/account number and dollar amount of the liquidity fee for each Vanguard fund account. Each such facsimile transmission shall include the Intermediary’s name and address, and the name and address of an Intermediary contact for purposes of any questions regarding the fees remitted.

 

Wire to:		▇▇▇▇▇ Fargo Bank NA
		San Francisco, CA
ABA:		▇▇▇▇▇▇▇▇▇
For credit to:		Vanguard Fee Collection Account
Account		2000032593703
number:		Vanguard Fund and Account Number
For further
credit to:

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

ANNEX A

 

A determination that natural persons are the beneficial owners of shares held in an account may be based on any of the following circumstances.

 

1.

Representation of Beneficial Ownership. A natural person represents, in an account application or agreement or otherwise, that he or she is the beneficial owner of shares held in an account.

 

2.

Customer Identification Programs. The account holder has provided a Social Security number (SSN), an individual taxpayer identification number, a passport number and country of issuance, an alien identification card number, or the number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard, pursuant to a customer identification program.

 

3.

Social Codes. The account qualifies for a National Securities Clearing Corporation social code if it has been:

 

a.

categorized as retail in the Money Market Fund Social Code Categorization Matrix, available at ▇▇▇▇▇://▇▇▇.▇▇▇.▇▇▇/▇▇▇/▇▇_▇▇▇_▇▇▇▇▇▇_▇▇▇▇.▇▇▇, or

b.

categorized as retail/institutional in such matrix and a natural person has investment power over the account.

 

4.

Federal Tax Forms. The accountholder has provided one of following IRS forms:

 

a.

a Form W-9 indicating the accountholder is an individual, sole proprietor, or single-member LLC and (i) the Form W-9 provides a SSN or (ii) a natural person has investment power over the account;

b.

a Form W-9 indicating the accountholder is an estate or trust and (i) the Form W-9 provides a SSN, (ii) the account is registered in the name of or otherwise for the benefit of an estate or a revocable personal trust, or (iii) a natural person is a trustee with investment power over the account; or

c.

a Form W-8BEN.

 

5.

Retirement and Other Individual Savings Plans. The account has been established by a retirement plan, savings plan, or trust in which participants, settlors, trustees, or beneficiaries who are natural persons have investment power over the underlying plan accounts. These include, without limitation:

 

a.

participant-directed defined contribution plans under Section 3(34) of the Employee Retirement Income Security Act;

b.

individual retirement accounts under Section 408 or 408A of the Internal Revenue Code (IRC);

c.

simplified employee pension arrangements under Section 408(k) of the IRC;

d.

simple retirement accounts under Section 408(p) of the IRC;

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

e.

custodial accounts under Section 403(b)(7) of the IRC;

 

f.

deferred compensation plans for government or tax-exempt organization employees under Section 457 of the IRC;

 

▇.

▇▇▇▇▇ plans under Section 401(a) of the IRC;

 

▇.

▇▇▇▇▇▇ medical savings accounts under Section 220(d) of the IRC;

 

i.

college savings plans under Section 529 of the IRC; or

 

j.

health savings account plans under Section 223 of the IRC.

 

6.

Escheatment Accounts. A state authority has established the account to hold the retail fund’s shares that become subject to the state’s unclaimed property or escheatment laws.

  

7.

Other. A securities intermediary has reasonably determined that natural persons are the beneficial owners of shares held in an account based on the applicable facts and circumstances.

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058

 

 

ANNEX B

 

ICI Best Practices for Fees & Gates

 

The following table summarizes the results for each combination of money market-related Fund/SERV® fields previously described.
Money Market Liquidity Fee/Redemption Gate Indicator	Transaction Received Time and Transaction  Received Date	Aggregated Order Indicator	Results and Considerations
F=Fund	Required	1=Transactions are not aggregated	Fund will apply a fee/gate on applicable transactions
F=Fund	Required	2=Transactions are aggregated by “like” orders	Fund will apply a fee/gate. Trades could have pre and post fee/gate timestamps on the underlying sub-account transactions, therefore may require adjustment outside of the NSCC
F=Fund	Required	3=Transactions are net of purchases and redemptions	Illogical. Funds should reject
F=Fund	Required	4=Unknown at time of placement	Illogical. Funds should reject
B=Intermediary	Optional (best practice – blank)	1=Transactions are not aggregated	Firm will apply a fee/gate on applicable transactions
B=Intermediary	Optional (best practice – blank)	2=Transactions are aggregated by “like” orders	Firm will apply a fee/gate on applicable transactions
B=Intermediary	Optional (best practice – blank)	3=Transactions are net of purchases and redemptions	Firm will apply a fee/gate on applicable transactions
B=Intermediary	Optional (best practice – blank)	4=Unknown at time of placement	Firm will apply a fee/gate on applicable transactions
Blank	Optional (best practice – firms should provide)	Blank	Fund will apply a fee/gate on applicable transactions [contingent upon Vanguard trading agreement]
Blank	Optional (best practice – firms should provide)	1=Transactions are not aggregated	Fund will apply a fee/gate on applicable transactions [contingent upon Vanguard trading agreement]
Blank	Optional (best practice – firms should provide)	2=Transactions are aggregated by “like” orders	Fund will apply a fee/gate. Trades could have pre and post fee/gate timestamps on the underlying sub-account transactions, therefore may require adjustment outside of the NSCC [contingent upon Vanguard trading agreement]
Blank	Optional (best practice – blank)	3=Transactions are net of purchases and redemptions	Illogical. Funds should reject
Blank	Optional (best practice – blank)	4=Unknown at time of placement	Illogical. Funds should reject

 

ANNEX B

 

FAS/[COMPANY]

DEFINED CONTRIBUTION CLEARANCE

& SETTLEMENT AGREEMENT (VVIF ONLY)

0458058