AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of this 18th day of March, 2003, between VANGUARD
EQUITY INCOME FUND, a Delaware business trust (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇
& CO., INC. (the "Adviser"), an indirect wholly-owned subsidiary of ▇▇▇▇▇
▇▇▇▇▇▇▇▇, a closed-end investment company registered under the Investment
Company Act of 1940 (the "1940 Act").
WHEREAS, the Company is an open-end, diversified management investment
company registered under the 1940 Act, as amended;
WHEREAS, the Company offers a series of shares known as Vanguard Equity
Income Fund (the "Fund"); and
WHEREAS, the Company desires to retain Adviser to render investment
advisory services to certain assets of the Fund which the Board of Trustees of
the Company determines to assign to Adviser (referred to in the Agreement as the
"▇▇▇▇▇ Portfolio"), and Adviser is willing to render such services;
NOW, THEREFORE, this Agreement
W I T N E S S E T H
that in consideration of the premises and mutual promises hereinafter set forth,
the parties hereto agree as follows:
1. Appointment of Adviser. The Company hereby employs Adviser as investment
adviser, on the terms and conditions set forth herein, for the assets of the
Fund that the Board of Trustees determines to assign to Adviser. The Board of
Trustees may, from time to time, make additions to, and withdrawals from, the
assets of the Fund assigned to Adviser. Adviser accepts such employment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Duties of Adviser. The Company employs Adviser to manage the investment
and reinvestment of the assets of the ▇▇▇▇▇ Portfolio, to continuously review,
supervise and administer an investment program for such assets of the Fund, to
determine in its discretion the securities to be purchased or sold and the
portion of such assets to be held uninvested, to provide the Fund with all
records concerning the activities of Adviser that the Fund is required to
maintain, and to render regular reports to the Fund's officers and Board of
Trustees concerning the discharge of the foregoing responsibilities. Adviser
will discharge the foregoing responsibilities subject to the control of the
officers and the Board of Trustees of the Company, and in compliance with the
objectives, policies and limitations set forth in the Fund's prospectus, any
additional operating policies or procedures that the Fund communicates to the
Adviser in writing, and applicable laws and regulations. Adviser agrees to
provide, at its own expense, the office space, furnishings and equipment and the
personnel required by it to perform the services on the terms and for the
compensation provided herein.
3. Securities Transactions. Adviser is authorized to select the brokers or
dealers that will execute purchases and sales of securities for the ▇▇▇▇▇
Portfolio, and is directed to use its best efforts to obtain the best available
price and most favorable execution for such transactions, except as otherwise
permitted by the Board of Trustees of the Company pursuant to written policies
and procedures provided to the Adviser. Adviser will promptly communicate to the
Fund's officers and Board of Trustees such information relating to portfolio
transactions as they may reasonably request.
4. COMPENSATION OF ADVISER.
5. REPORTS. The Company and Adviser agree to furnish to each other current
prospectuses, proxy statements, reports to shareholders, certified copies of
their financial statements, and such other information with regard to their
affairs as each may reasonably request.
6. COMPLIANCE. Adviser agrees to comply with all policies, procedures or
reporting requirements that the Board of Trustees of the Company reasonably
adopts and communicates to the Adviser in writing, including any such policies,
procedures or reporting requirements relating to the soft dollar or directed
brokerage arrangements.
7. STATUS OF ADVISER. The services of Adviser to the Fund are not to be
deemed exclusive, and Adviser will be free to render similar services to others
so long as its services to the Fund are not impaired thereby. Adviser will be
deemed to be an independent contractor and will, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Company or
the Fund in any way or otherwise be deemed an agent of the Company or the Fund.
8. LIABILITY OF ADVISER. No provision of this Agreement will be deemed to
protect Adviser against any liability to the Company, the Fund or their
shareholders to which it might otherwise be subject by reason of any willful
misfeasance, bad faith or gross negligence in the performance of its duties or
the reckless disregard of its obligations under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective on April
1,2003, and will continue in effect thereafter only so long as such continuance
is approved at least annually by votes of the Company's Board of Trustees who
are not parties to such Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval. In
addition, the question of continuance of the Agreement may be presented to the
shareholders of the Fund; in such event, such continuance will be effected only
if approved by the affirmative vote of a majority of the outstanding voting
securities of the Fund.
Provided, however, that (i) this Agreement may at any time be terminated
without payment of any penalty either by vote of the Board of Trustees of the
Company or by vote of a majority of the outstanding voting securities of the
Fund, on sixty days' written notice to Adviser, (ii) this Agreement will
automatically terminate in the event of its assignment, and (iii) this Agreement
may be terminated by Adviser on ninety days' written notice to the Company.
Any notice under this Agreement will be given in writing, addressed and
delivered, or mailed postpaid, to the other party at any office of such party.
As used in this Section 9, the terms "assignment," "interested persons," a
"vote of a majority of the outstanding voting securities" will have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the Investment Company Act of 1940.
10. SEVERABILITY. If any provision of this Agreement will be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement will not be affected thereby.
11. PROXY POLICY. With regard to the solicitation of shareholder votes, the
Fund will vote the shares of all securities held by the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first set forth herein:
VANGUARD EQUITY INCOME FUND
By__/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman, CEO and President
▇▇▇▇ ▇ ▇▇▇▇▇ & CO., INC.
By__/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, CPA
Senior Vice President
Chief Financial Officer
