AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this ____ day of ___, 2002, between Vanguard Whitehall Funds, a business trust
formed under the laws of the State of Delaware with its principal place of
business at X.X. Xxx 0000, Xxxxxx Xxxxx, XX 00000 (the "Vanguard Trust"), on
behalf of Vanguard International Explorer Fund, a series of the Vanguard Trust
(the "Acquiring Fund"); Xxxxxxxx Capital Funds (Delaware), a business trust
formed under the laws of the State of Delaware with its principal place of
business at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Schroder Trust"), on behalf of the Schroder International Smaller Companies
Fund, a series of the Schroder Trust (the "Selling Fund"); The Vanguard Group,
Inc., a Pennsylvania corporation, with its principal place of business at X.X.
Xxx 0000, Xxxxxx Xxxxx, XX 00000 ("The Vanguard Group") (with respect to the
provisions of Paragraphs 9.2 and 9.4 only); and Xxxxxxxx Investment Management
North America Inc., a ____ corporation, with its principal place of business at
000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Schroder Management")
(with respect to the provisions of Paragraphs 9.2 and 9.3 only).
This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(F) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization of the Selling Fund (the "Reorganization") will consist of (i)
the transfer of all of the assets of the Selling Fund in exchange solely for
units of beneficial interest (the "Shares") of the Acquiring Fund (the
"Acquiring Fund Shares"), (ii) the assumption by the Acquiring Fund of certain
identified liabilities of the Selling Fund; and (iii) the distribution, after
the Closing Date (as defined in paragraph 1.2 of this Agreement), of Acquiring
Fund Shares to the shareholders of the Selling Fund in liquidation of the
Selling Fund as provided in this Agreement, all upon the terms and conditions
set out below.
WHEREAS, the Vanguard Trust and the Schroder Trust are each registered as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Acquiring Fund and the Selling Fund are authorized to issue
shares of beneficial interest;
WHEREAS, the Board of Trustees, including a majority of the trustees who
are not "interested persons" (as defined in the 1940 Act), of the Vanguard Trust
has determined with respect to the Acquiring Fund that the exchange of all of
the assets of the Selling Fund for Acquiring Fund Shares is in the best
interests of the Acquiring Fund and its shareholders;
WHEREAS, the Board of Trustees, including a majority of the trustees who
are not "interested persons" (as defined under the 1940 Act), of the Schroder
Trust has determined with respect to the Selling Fund that the exchange of all
the assets of, and certain identified liabilities of, the Selling Fund for
Acquiring Fund Shares is in the best interests of the Selling Fund and its
shareholders; and
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WHEREAS, The purpose and effect of the Reorganization is to change the form
of organization of the Selling Fund from a series of Schroder Trust to a series
of the Vanguard Trust. It is anticipated that the Reorganization will provide
long-term benefits to the Selling Fund's shareholders by immediately reducing
expenses and providing access to a larger, more diverse complex of funds, which
can appeal to a broader spectrum of investors, and thus increase the size and
efficiency of the fund and increase the likelihood of the realization of
economies of scale.
NOW THEREFORE, in consideration of the mutual promises contained in this
Agreement, the Vanguard Trust and the Schroder Trust agree as follows:
ARTICLE I
Transfer of Assets of the Selling Fund in Exchange for Acquiring Fund Shares and
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Assumption of Certain Identified Selling Fund Liabilities; Liquidation of the
Selling Fund
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1.1 Subject to the terms and conditions set out in this Agreement and on
the basis of the representations and warranties contained in this Agreement, the
Schroder Trust agrees to transfer the Selling Fund's assets in the manner set
out in paragraph 1.2 of this Agreement to the Acquiring Fund, and the Vanguard
Trust agrees in exchange for such assets: (a) to deliver to the Selling Fund the
number of Acquiring Fund Shares, including fractional Acquiring Fund Shares,
determined by dividing the value of the Selling Fund's net assets, computed in
the manner and as of the time and date set out in paragraph 2.1 of this
Agreement, by the net asset value of one Acquiring Fund Share, computed in the
manner and as of the time and date set out in paragraph 2.2 of this Agreement;
and (b) to assume certain identified liabilities of the Selling Fund, as set out
in paragraph 1.3 of this Agreement. Each of these transactions will take place
at the closing provided for in paragraph 3.1 of this Agreement (the "Closing").
1.2 The assets of the Selling Fund to be acquired by the Acquiring Fund
will consist of all property of the Selling Fund including, without limitation,
all cash, securities, commodities and futures interests, and dividend or
interest receivables that are owned by the Selling Fund and any deferred or
prepaid expenses shown as an asset on the books of the Selling Fund on the
closing date described in paragraph 3.1 of this Agreement (the "Closing Date").
The Schroder Trust, on behalf of the Selling Fund, shall have provided on
or before the date hereof the Vanguard Trust with (a) the financial statements
of the Selling Fund as of and for its most recently completed fiscal year (the
"Financial Statements"), and (b) a list of all of the Selling Fund's assets as
of the date of execution of this Agreement. The Schroder Trust, on behalf of the
Selling Fund, represents that as of the date of the execution of this Agreement
no changes have occurred in its financial position as reflected in its Financial
Statements other than those occurring in the ordinary course of its business in
connection with the purchase and sale of securities and the payment of its
normal operating expenses. The Schroder Trust, on behalf of the Selling Fund,
reserves the right to sell any of the Selling Fund's assets but will not,
without the prior written approval of the Vanguard Trust, acquire any
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additional assets for the Selling Fund other than instruments of the type in
which the Acquiring Fund is permitted to invest. The Schroder Trust, on behalf
of the Selling Fund, will, within a reasonable time prior to the Closing Date,
furnish the Vanguard Trust with a list of the assets, if any, on the Selling
Fund's list referred to in the first sentence of this paragraph that do not
conform to the Acquiring Fund's investment objectives, policies and
restrictions. In the event that the Selling Fund holds any assets that the
Acquiring Fund may not hold, the Selling Fund will use its best efforts to
dispose of such assets prior to the Closing Date.
1.3 The Schroder Trust, on behalf of the Selling Fund, will seek to
discharge all of the Selling Fund's known liabilities and obligations prior to
the Closing Date, other than those liabilities and obligations that would
otherwise be discharged at a later date in the ordinary course of the Selling
Fund's business. Except as specifically provided in this paragraph 1.3, the
Acquiring Fund will assume the liabilities, expenses, costs, charges and
reserves reflected on a Statement of Assets and Liabilities of the Selling Fund
(as defined in paragraph 4.1(g)) prepared on behalf of the Selling Fund, as of
the Valuation Date (as defined in paragraph 2.1 of this Agreement), in
accordance with generally accepted accounting principles consistently applied
from the prior audited period (hereinafter the "Liabilities"). The Acquiring
Fund will assume only those Liabilities of the Selling Fund reflected in the
Statement of Assets and Liabilities and will not, except as specifically
provided in this paragraph 1.3, assume any other contingent, unknown, or
unaccrued liabilities, all of which will remain the obligation of the Selling
Fund.
1.4 As provided in paragraph 3.4 of this Agreement, as soon after the
Closing Date as is practicable (the "Liquidation Date"), the Selling Fund will
liquidate and distribute on a proportionate basis to the Selling Fund's
shareholders of record determined as of the close of business on the Closing
Date (the "Selling Fund Shareholders") the Acquiring Fund Shares it receives
pursuant to paragraph 1.1 of this Agreement. This liquidation and distribution
will be accomplished by the transfer of the Acquiring Fund Shares then credited
to the account of the Selling Fund on the books of the Acquiring Fund to open
accounts on the share records of the Acquiring Fund in the names of the Selling
Fund Shareholders representing the respective proportionate number of Acquiring
Fund Shares due those shareholders. All issued and outstanding Shares of the
Selling Fund ("Selling Fund Shares") will simultaneously be canceled on the
books of the Selling Fund. The Acquiring Fund will not issue certificates
representing the Acquiring Fund's Shares in connection with the exchange of
Acquiring Fund Shares for shares of the Selling Fund.
1.5 After the Reorganization, ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the Acquiring Fund's
current prospectus and statement of additional information.
1.6 After distribution of the Acquiring Fund Shares pursuant to paragraph
1.4 of this Agreement, the Selling Fund will be liquidated promptly and
terminated as a series of the Schroder Trust ("Termination Date"). In addition,
the Schroder Trust will as soon as practicable after the Termination Date take
all other actions in connection with the termination of the Selling Fund as
required by applicable law.
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1.7 Any reporting responsibility of the Selling Fund to any public
authority is and will remain the responsibility of the Selling Fund up to and
including the Closing Date and the Termination Date.
1.8 Any transfer taxes payable upon issuance of the Acquiring Fund Shares
in a name other than the registered holder of Selling Fund Shares on the books
of the Selling Fund as of that time will, as a condition of the issuance and
transfer, be paid by the person to whom the Acquiring Fund Shares are to be
issued and transferred.
ARTICLE II
Valuation
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2.1 The value of the Selling Fund's assets to be acquired under this
Agreement will be the value of the assets computed as of the close of regular
trading on the New York Stock Exchange, Inc. (the "NYSE") on the Closing Date
(the time and date being referred to as the "Valuation Date" for purposes of
this Agreement), using the valuation procedures set out in the Selling Fund's
then-current prospectus and/or statement of additional information.
2.2 The net asset value of the Acquiring Fund Shares will be the net asset
value per share computed as of the Valuation Date, using the valuation
procedures set out in the Acquiring Fund's then-current prospectus and/or
statement of additional information.
2.3 The number of Acquiring Fund Shares to be issued (including fractional
shares, if any) in exchange for the Selling Fund's net assets will be determined
by dividing the value of the net assets of the Selling Fund determined using the
same valuation procedures referred to in paragraph 2.1 of this Agreement by the
net asset value per share of the Acquiring Fund determined in accordance with
paragraph 2.2 of this Agreement.
2.4 All computations of value will be made in accordance with the regular
practices of the Vanguard Trust, subject to this Article II.
ARTICLE III
Closing and Closing Date
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3.1 The Closing Date for the Reorganization will be _________, 2002, or
such other date agreed to in writing by the Vanguard Trust and the Schroder
Trust. All acts taking place at the Closing will be deemed to take place
simultaneously as of the close of business on the Closing Date unless otherwise
provided. The Closing will be held as of 4:00 p.m., at the offices of the
Vanguard Trust, 000 Xxxxxxxx Xxxx., Xxxxxxx, XX 00000, or at such other time
and/or place agreed to by the Vanguard Trust and the Schroder Trust.
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3.2 The custodian for the Acquiring Fund (the "Custodian") will deliver at
the Closing a certificate of an authorized officer stating that: (a) the Selling
Fund's portfolio securities, cash and any other assets have been delivered in
proper form to the Acquiring Fund prior to or on the Closing Date, and (b) all
necessary taxes, including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment has been made, in
conjunction with the delivery of portfolio securities.
3.3 In the event that on the Valuation Date (a) the NYSE or another primary
trading market for portfolio securities of the Acquiring Fund or the Selling
Fund is closed to trading or trading on the market is restricted; or (b) trading
or the reporting of trading on the NYSE or elsewhere is disrupted so that
accurate appraisal of the value of the net assets of the Acquiring
Fund or the Selling Fund is impracticable, the Closing Date will be postponed
until the first business day after the day when normal trading has fully resumed
and reporting has been restored.
3.4 The Schroder Trust, on behalf of the Selling Fund, will deliver at the
Closing a list of the names and addresses of the Selling Fund Shareholders and
the number of outstanding Selling Fund Shares owned by each such shareholder
immediately prior to the Closing or provide evidence that the information has
been provided to the Acquiring Fund's transfer agent. The Vanguard Trust, on
behalf of the Acquiring Fund, will issue and deliver a confirmation evidencing
that the Acquiring Fund Shares have been credited to the Selling Fund's account
on the Closing Date to the Secretary of the Schroder Trust or provide evidence
satisfactory to the Schroder Trust that the Acquiring Fund Shares have been
credited to the Selling Fund's account on the books of the Acquiring Fund. At
the Closing, each party to this Agreement will deliver to the other party such
bills of sale, checks, assignments, share certificates, if any, receipts or
other documents as the other party or its counsel may reasonably request.
ARTICLE IV
Representations and Warranties
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4.1 The Schroder Trust, on behalf of the Selling Fund, represents and
warrants to the Vanguard Trust as follows:
(a) The Selling Fund is an investment series of the Schroder Trust, a
business trust duly organized, validly existing, and in good standing under
the laws of the State of Delaware;
(b) The Schroder Trust is a registered open-end management investment
company and its registration with the Securities and Exchange Commission
(the "Commission") as an investment company under the 1940 Act is in full
force and effect;
(c) The Schroder Trust is not, and the execution, delivery, and
performance of this Agreement (subject to approval of the Selling Fund
Shareholders) will not result, in a violation of any provision of its
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Declaration of Trust or any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Schroder Trust on behalf
of itself or on behalf of the Selling Fund is a party or by which its
property is bound;
(d) The Schroder Trust will turn over all of the books and records
relating to the Selling Fund (including all books and records required to
be maintained under the 1940 Act and the Code and the rules and regulations
under the 1940 Act and the Code) to the Vanguard Trust at the Closing;
(e) The Schroder Trust has no contracts or other commitments (other
than this Agreement) with respect to the Selling Fund that will be
terminated with liability to the Schroder Trust prior to the Closing Date;
(f) Except as previously disclosed in writing to and accepted by the
Vanguard Trust, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending, or to the
Schroder Trust's knowledge, threatened against the Schroder Trust in
connection with the Selling Fund or any of its properties or assets that,
if adversely determined, would materially and adversely affect the Schroder
Trust's financial condition or the conduct of its business. The Schroder
Trust knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that materially
and adversely affects its business or the business of the Selling Fund or
the Schroder Trust's ability to consummate the transactions contemplated by
this Agreement;
(g) The statements of assets and liabilities of the Schroder Trust
relating to the Selling Fund for the period beginning with commencement of
the Selling Fund and ending on [Date] have been audited by
PricewaterhouseCoopers LLP, certified public accountants, and are in
accordance with generally accepted accounting principles consistently
applied, and those statements (copies of which have been furnished to the
Acquiring Fund) fairly reflect the financial condition of the Selling Fund
as of such dates, and no known contingent liabilities of the Selling Fund
exist as of such dates that are not disclosed in those statements;
(h) Since [Date], no material adverse change has occurred in the
Selling Fund's financial condition, assets, liabilities or business other
than changes occurring in the ordinary course of business, or any
incurrence by the Selling Fund of indebtedness maturing more than one year
from the date that such indebtedness was incurred, except as otherwise
disclosed to and accepted by the Vanguard Trust. For the purposes of this
subparagraph (h), a decline in net asset value per share or the total
assets of the Selling Fund in the ordinary course of business does not
constitute a material adverse change;
(i) At the Closing Date, all federal and other tax returns and other
reports or filings with respect to the Selling Fund required by law to have
been filed by the Closing Date will have been filed (including, without
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limitation, tax returns for the Selling Fund's fiscal year ended October
31, 2001), and all federal and other taxes will have been paid so far as
due, or provision will have been made for the payment of those taxes and,
to the best of the Schroder Trust's knowledge, no such tax return is
currently under audit and no assessment has been asserted with respect to
such a return;
(j) For each of its prior fiscal years of operation and for each
subsequent quarter end of the current fiscal year, the Schroder Trust has
met the requirements of Subchapter M of the Code for qualification and
treatment of the Selling Fund as a regulated investment company; and all of
the Selling Fund's issued and outstanding shares have been offered and sold
in compliance in all material respects with applicable federal and state
securities laws;
(k) At the date of this Agreement, all issued and outstanding Selling
Fund Shares are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable. All of the issued and
outstanding Selling Fund Shares will, at the time of Closing, be held by
the persons and in the amounts set out in the records of the Schroder
Trust's transfer agent as provided in paragraph 3.4 of this Agreement. The
Schroder Trust does not have outstanding any options, warrants or other
rights to subscribe for or purchase any of the Selling Fund's Shares, nor
is any security convertible into any of the Selling Fund's shares currently
outstanding;
(l) At the Closing Date, the Schroder Trust will have good and
marketable title to the Selling Fund's assets to be transferred to the
Acquiring Fund pursuant to paragraph 1.2 of this Agreement, and full right,
power and authority to sell, assign, transfer and deliver the assets under
the terms and conditions of this Agreement and, upon delivery and payment
for the assets, the Acquiring Fund will acquire good and marketable title
to them, subject to no restrictions on the full transfer of the assets,
including such restrictions as might arise under the Securities Act of
1933, as amended (the "1933 Act"), other than as disclosed to the Vanguard
Trust;
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions on the part of the Schroder
Trust's Board of Trustees and, subject to the approval of the Selling Fund
Shareholders, this Agreement will constitute a valid and binding obligation
of the Schroder Trust, enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(n) The information to be furnished by the Schroder Trust for use in
no-action letters, applications for exemptive orders, registration
statements, proxy materials and other documents that may be necessary in
connection with the transactions contemplated by this Agreement will be
accurate and complete in all material respects and will comply in all
material respects with federal securities and other laws and regulations
under those laws applicable to those transactions;
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(o) The proxy statement of the Selling Fund (the "Proxy Statement") to
be included in the Registration Statement referred to in paragraph 5.7 of
this Agreement (insofar as it relates to the Selling Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in the Proxy Statement or necessary to make the
statements in the Proxy Statement, in light of the circumstances under
which the statements were made, not materially misleading; and
(p) The current prospectus and statement of additional information
filed with the Commission as part of the Schroder Trust's registration
statement on Form N-1A, insofar as they relate to the Selling Fund, conform
in all material respects to the applicable requirements of the 1933 Act and
the 1940 Act and the rules and regulations under those Acts and do not
include any untrue statement of a material fact or omit to state any
material fact required to be stated in that registration statement or
necessary to make the statements in the registration statement, in light of
the circumstances under which they were made, not misleading.
4.2 The Vanguard Trust, on behalf of the Acquiring Fund, represents and
warrants to the Schroder Trust as follows:
(a) The Acquiring Fund is an investment series of a business trust,
duly organized, validly existing and in good standing under the laws of the
State of Delaware;
(b) The Vanguard Trust is a registered open-end management investment
company and its registration with the Commission as an investment company
under the 1940 Act is in full force and effect;
(c) The current prospectus and statement of additional information
filed as part of the Vanguard Trust's registration statement on Form N-1A,
which will become effective prior to the Closing Date, insofar as they
relate to the Acquiring Fund (the "Vanguard Trust Registration Statement")
conform in all material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the Commission
thereunder and do not include any untrue statement of a material fact or
omit to state any material fact required to be stated in the Vanguard Trust
Registration Statement or necessary to make the statements therein, in
light of the circumstances under which they were made, not materially
misleading;
(d) The Vanguard Trust is not, and the execution, delivery and
performance of this Agreement will not result, in a violation of its
Declaration of Trust or any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Vanguard Trust on behalf
of itself or on behalf of the Acquiring Fund is a party or by which it is
bound;
(e) Except as previously disclosed in writing to and accepted by the
Schroder Trust, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or, to the
Vanguard Trust's knowledge, threatened against the Vanguard Trust in
connection with the Acquiring Fund or any of its properties or assets that,
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if adversely determined, would materially and adversely affect the Vanguard
Trust's financial condition or the conduct of its business. The Vanguard
Trust knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree or judgment of any court or governmental body that materially
and adversely affects its business or the business of the Acquiring Fund or
the Vanguard Trust's ability to consummate the transactions contemplated in
this Agreement;
(f) Since the inception of the Acquiring Fund, no material adverse
change has occurred with respect to the Acquiring Fund's financial
condition, assets, liabilities or business other than changes occurring in
the ordinary course of business, or any incurrence by the Acquiring Fund of
indebtedness maturing more than one year from the date that such
indebtedness was incurred, except as otherwise disclosed to and accepted by
the Schroder Trust. For the purposes of this subparagraph (f), a decline in
net asset value per share or the total assets of the Acquiring Fund in the
ordinary course of business does not constitute a material adverse change;
(g) At the Closing Date, all federal and other tax returns and reports
with respect to the Acquiring Fund required by law to have been filed by
the Closing Date will have been filed, and all federal and other taxes will
have been paid so far as due, or provision will have been made for the
payment of those taxes;
(h) The Vanguard Trust intends to meet the requirements of Subchapter
M of the Code for qualification and treatment of the Acquiring Fund as a
regulated investment company in the future;
(i) At the date of this Agreement, all issued and outstanding
Acquiring Fund Shares are, and at the Closing Date will be, duly and
validly issued and outstanding, fully paid and non-assessable, with no
personal liability attaching to the ownership of those shares. The Vanguard
Trust does not have outstanding any options, warrants or other rights to
subscribe for or purchase any Acquiring Fund Shares, nor is any security
convertible into any Acquiring Fund Shares currently outstanding;
(j) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions, if any, of the Vanguard Trust's
Board of Trustees, and this Agreement will constitute a valid and binding
obligation of the Vanguard Trust enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(k) The Acquiring Fund Shares to be issued and delivered to the
Selling Fund, for the account of the Selling Fund Shareholders, under the
terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued
Acquiring Fund Shares, and will be fully paid and non-assessable with no
personal liability attaching to the ownership of those shares;
(l) The information to be furnished by the Vanguard Trust for use in
no-action letters, applications for exemptive orders, registration
statements, proxy materials and other documents that may be necessary in
connection with the transactions contemplated in this Agreement will be
accurate and complete in all material respects and will comply in all
material respects with federal securities and other laws and regulations
applicable to those transactions;
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(m) The Registration Statement referred to in paragraph 5.7 of this
Agreement and the Proxy Statement to be included in the Registration
Statement (insofar as it relates to the Acquiring Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in the Proxy Statement or necessary to make the
statements in the Proxy Statement, in light of the circumstances under
which such statements were made, not materially misleading; and
(n) The Vanguard Trust agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and the 1940 Act
as it may deem appropriate in order to continue the operations of the
Acquiring Fund after the Closing Date.
ARTICLE V
Covenants of the Acquiring Fund and the Selling Fund
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5.1 The Vanguard Trust will operate the business of the Acquiring Fund, and
the Xxxxxxxx Trust will operate the business of the Selling Fund, in the
ordinary course between the date of this Agreement and the Closing Date. The
Vanguard Trust and the Xxxxxxxx Trust agree for purposes of this Agreement that
the declaration and payment of customary dividends and distributions will be
considered to have been paid in the ordinary course of business.
5.2 The Xxxxxxxx Trust, on behalf of the Selling Fund, will call a meeting
of its shareholders to consider and act upon this Agreement and to take all
other actions in coordination with the Vanguard Trust necessary to obtain
approval of the transactions contemplated by this Agreement.
5.3 The Xxxxxxxx Trust, on behalf of the Selling Fund, covenants that the
Acquiring Fund Shares to be issued under this Agreement are not being acquired
for the purpose of making any distribution other than in accordance with the
terms of this Agreement.
5.4 The Xxxxxxxx Trust, on behalf of the Selling Fund, will assist the
Vanguard Trust in obtaining all information on record with the Selling Fund's
transfer agent that the Vanguard Trust reasonably requests concerning the
beneficial ownership of the Selling Fund's Shares.
5.5 Subject to the provisions of this Agreement, the Vanguard Trust and the
Xxxxxxxx Trust each will take, or cause to be taken, all action, and do, or
cause to be done, all actions reasonably necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
including any actions required to be taken after the Closing Date.
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5.6 Prior to the Closing Date, the Xxxxxxxx Trust will furnish to the
Vanguard Trust copies of the tax returns for the Selling Fund which were filed
on its behalf for its immediately preceding five taxable years, together with
certification by the Selling Fund's President and Treasurer that, to the best of
their knowledge, they are correct and complete insofar as relevant to the
determination of earnings and profits of the Selling Fund for such time period.
5.7 The Xxxxxxxx Trust, on behalf of the Selling Fund, will provide the
Vanguard Trust with information reasonably necessary for the preparation of a
prospectus (the "Prospectus") that will include the Proxy Statement referred to
in paragraphs 4.1(o) and 4.2(m) of this Agreement, all to be included in a
registration statement on Form N-14 of the Vanguard Trust (the "Registration
Statement"), in compliance with the 1933 Act, the Securities Exchange Act of
1934 (the "1934 Act") and the 1940 Act in connection with the meeting of the
Selling Fund's shareholders to consider approval of this Agreement and the
transactions contemplated by this Agreement.
5.8 As promptly as practicable, but in any case within thirty days of the
Closing Date, the Xxxxxxxx Trust, on behalf of the Selling Fund, will furnish
the Vanguard Trust with a statement containing information required for purposes
of complying with Rule 24f-2 under the 1940 Act. A notice pursuant to Rule 24f-2
will be filed by the Acquiring Fund offsetting redemptions by the Selling Fund
during the fiscal year ending on or after the Closing Date against sales of the
Acquiring Fund Shares; and the Xxxxxxxx Trust agrees that it will not net
redemptions during that period by the Selling Fund against sales of shares of
any other series of the Xxxxxxxx Trust.
5.9 As promptly as practicable, but in any case within the period required
by applicable law or regulation, the Xxxxxxxx Trust, on behalf of the Selling
Fund, will file all federal and other tax returns and other reports or filings
with respect to the Selling Fund required by applicable law or regulation to be
filed.
ARTICLE VI
Conditions Precedent to the Obligations of the Xxxxxxxx Trust
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The obligations of the Xxxxxxxx Trust to consummate the transactions
provided for in this Agreement will be subject, at its election, to the
performance by the Vanguard Trust of all obligations to be performed by it under
this Agreement on or before the Closing Date and, in addition to those
obligations to the following specific conditions:
6.1 All representations and warranties of the Vanguard Trust contained in
this Agreement will be true and correct in all material respects as of the date
of this Agreement and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date.
6.2 The Vanguard Trust will have delivered to the Xxxxxxxx Trust a
certificate executed in its name by its Chief Executive Officer, President or
Vice President and its Secretary, Treasurer or Assistant Treasurer, in a form
11
reasonably satisfactory to the Xxxxxxxx Trust and dated as of the Closing Date,
to the effect that the representations and warranties of the Vanguard Trust made
in this Agreement are true and correct at and as of the Closing Date, except as
they may be affected by the transactions contemplated by this Agreement and as
to such other matters as the Xxxxxxxx Trust may reasonably request.
6.3 The Xxxxxxxx Trust will have received on the Closing Date a favorable
opinion from Xxxxxx, Xxxxx & Xxxxxxx, LLP, counsel to the Vanguard Trust, dated
as of the Closing Date, in a form reasonably satisfactory to the Xxxxxxxx Trust,
covering the following points:
(a) the Acquiring Fund is a separate series of the Vanguard Trust, a
business trust duly organized, validly existing and in good standing under the
laws of the State of Delaware and the Vanguard Trust has the corporate power to
own all of the Acquiring Fund's properties and assets and to carry on the
Acquiring Fund's business as presently conducted;
(b) the Vanguard Trust is registered as an investment company under the
1940 Act, and, to such counsel's knowledge, the Fund's registration with the
Commission as an investment company under the 1940 Act is in force and effect
with respect to the Acquiring Fund;
(c) this Agreement has been duly authorized, executed and delivered by the
Vanguard Trust and, assuming that the Prospectus, Registration Statement and
Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and the
rules and regulations under those laws and, assuming due authorization,
execution and delivery of the Agreement by the Xxxxxxxx Trust, is a valid and
binding obligation of the Vanguard Trust enforceable against the Vanguard Trust
in accordance with its terms, subject to the effect of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other laws relating to or
affecting creditors' rights generally and to general equity principles;
(d) the Acquiring Fund Shares to be issued to the Selling Fund's
shareholders as provided by this Agreement are duly authorized and upon delivery
will be validly issued and outstanding and are fully paid and non-assessable
with no personal liability attaching to ownership of the Shares, and no
shareholder of the Acquiring Fund has any preemptive rights to subscription or
purchase in respect of the Shares;
(e) the execution and delivery of this Agreement did not, and the
consummation of the transactions contemplated hereby will not, result in a
violation of the Vanguard Trust's Declaration of Trust or in a material
violation of any provision of any agreement relating to the Acquiring Fund
(known to such counsel) to which the Vanguard Trust is a party or by which it or
its properties are bound or, to the knowledge of such counsel, result in the
acceleration of any obligation or the imposition of any penalty, under any
agreement, judgment, or decree to which the Vanguard Trust is a party or by
which it or its properties are bound;
12
(f) to the knowledge of such counsel, no consent, approval, authorization
or order of any court or governmental authority of the United States or State of
Delaware is required for the consummation by the Vanguard Trust of the actions
contemplated in this Agreement, except such as have been obtained under the 1933
Act, the 1934 Act and the 1940 Act;
(g) the descriptions in the Proxy Statement, insofar as they relate to the
Vanguard Trust, the Acquiring Fund, or The Vanguard Group of statutes, legal and
governmental proceedings, investigations, orders, decrees or judgments of any
court or governmental body in the United States, and contracts and other
documents, if any, are accurate in all material respects and fairly present the
information required to be shown;
(h) such counsel does not know of any legal, administrative or governmental
proceedings, investigation, order, decree or judgment of any court or
governmental body, insofar as they relate to the Vanguard Trust or the Acquiring
Fund or its assets or properties, pending, threatened or otherwise existing on
or before the effective date of the Registration Statement or the Closing Date,
which are required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement that are not described and filed as
required; and
(i) the Vanguard Trust Registration Statement is effective under the 1933
Act and the 1940 Act and no stop-order suspending its effectiveness or order
pursuant to section 8(e) of the 1940 Act has been issued.
Counsel also will state that they have participated in conferences with
officers and other representatives of the Vanguard Trust at which the contents
of the Proxy Statement, the Vanguard Trust Registration Statement and related
matters were discussed and, although they are not passing upon and do not assume
any responsibility for the accuracy, completeness or fairness of the statements
contained in the Proxy Statement and the Vanguard Trust Registration Statement
(except to the extent indicated in paragraph (g) of their above opinion), on the
basis of the foregoing information (relying as to materiality upon the opinions
of officers and other representatives of the Vanguard Trust), they do not
believe that the Proxy Statement and the Vanguard Trust Registration Statement
as of their respective dates, as of the date of the Selling Fund's shareholders'
meeting, and as of the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated in the Proxy
Statement and the Vanguard Trust Registration Statement or necessary to make the
statements in the Proxy Statement and the Vanguard Trust Registration Statement
in the light of the circumstances under which they were made not misleading.
The opinion may state that counsel does not express any opinion or belief
as to the Financial Statements or other financial data, or as to the information
relating to the Xxxxxxxx Trust or the Selling Fund, contained in the Proxy
Statement, Registration Statement or the Vanguard Trust Registration Statement,
and that the opinion is solely for the benefit of the Xxxxxxxx Trust and its
directors and officers. Such counsel may rely as to matters governed by the laws
of the State of Delaware on an opinion of local counsel and/or certificates of
officers or directors of the Acquiring Fund. The opinion also will include such
other matters incident to the transaction contemplated by this Agreement, as the
Xxxxxxxx Trust may reasonably request.
13
In this paragraph 6.3, references to the Proxy Statement include and relate
only to the text of such Proxy Statement and not, except as specifically stated
above, to any exhibits or attachments to the Proxy Statement or to any documents
incorporated by reference in the Proxy Statement.
ARTICLE VII
Conditions Precedent to the Obligations of the Vanguard Trust
-------------------------------------------------------------
The obligations of the Vanguard Trust to complete the transactions provided
for in this Agreement will be subject, at its election, to the performance by
the Xxxxxxxx Trust of all the obligations to be performed by it under this
Agreement on or before the Closing Date and, in addition to those obligations,
the following conditions:
7.1 All representations and warranties of the Xxxxxxxx Trust contained in
this Agreement will be true and correct in all material respects as of the date
of this Agreement and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force and
effect as if made on and as of the Closing Date;
7.2 The Xxxxxxxx Trust will have delivered to the Vanguard Trust a
statement of the Selling Fund's assets and liabilities, together with a list of
the Selling Fund's portfolio securities showing the tax costs (and, if different
from tax costs, book costs) of those securities by lot and the holding periods
of the securities, as of the Closing Date, certified by the Treasurer or
Assistant Treasurer of the Xxxxxxxx Trust;
7.3 The Xxxxxxxx Trust will have delivered to the Vanguard Trust on the
Closing Date a certificate executed in its name, and on behalf of the Selling
Fund, by its President or Vice President and its Treasurer or Assistant
Treasurer, in form and substance satisfactory to the Vanguard Trust and dated as
of the Closing Date, to the effect that the representations and warranties of
the Xxxxxxxx Trust made in this Agreement are true and correct at and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Vanguard Trust shall
reasonably request; and
7.4 The Vanguard Trust will have received on the Closing Date a favorable
opinion of Ropes & Xxxx, counsel to the Xxxxxxxx Trust, dated as of the Closing
Date, in a form reasonably satisfactory to the Vanguard Trust, covering the
following points:
(a) the Selling Fund is a separate investment series of the Xxxxxxxx Trust,
a business trust that is duly organized, validly existing and in good standing
under the laws of the State of Delaware and the Xxxxxxxx Trust has the corporate
power to own all of the Selling Fund's properties and assets and to carry on the
Selling Fund's business as presently conducted;
(b) the Xxxxxxxx Trust is registered as an investment company under the
1940 Act and, to such counsel's knowledge, the Xxxxxxxx Trust's registration
14
with the Commission as an investment company under the 1940 Act is in force and
effect with respect to the Selling Fund;
(c) this Agreement has been duly authorized, executed and delivered by the
Xxxxxxxx Trust and, assuming that the Prospectus, the Registration Statement and
the Proxy Statement comply with the 1933 Act, the 1934 Act and the 1940 Act and
the rules and regulations under those laws and, assuming due authorization,
execution and delivery of the Agreement by the Vanguard Trust, is a valid and
binding obligation of the Xxxxxxxx Trust enforceable against the Xxxxxxxx Trust
in accordance with its terms, subject to the effect of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other laws relating to or
affecting creditors, rights generally and to general equity principles;
(d) the execution and delivery of the Agreement did not, and the
consummation of the transactions contemplated by this Agreement will not, result
in a violation of the Xxxxxxxx Trust's Declaration of Trust or a material
violation of any provision of any agreement (known to such counsel) to which the
Xxxxxxxx Trust is a party or by which it or its properties are bound or, to the
knowledge of such counsel, result in the acceleration of any obligation or the
imposition of any penalty, under any agreement, judgment or decree to which the
Xxxxxxxx Trust is a party or by which it or its properties are bound;
(e) to the knowledge of such counsel, no consent, approval, authorization
or order of any court or governmental authority of the United States or State of
Delaware is required for the consummation by the Xxxxxxxx Trust of the
transactions contemplated in this Agreement, except such as have been obtained
under the 1933 Act, the 1934 Act and the 1940 Act;
(f) counsel does not know of any legal, administrative or governmental
proceedings, investigation, order, decree or judgment of any court or
governmental body, only insofar as they relate to the Xxxxxxxx Trust or its
respective assets or properties, pending, threatened or otherwise existing on or
before the effective date of the Registration Statement or the Closing Date,
which are required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement that are not described and filed as
required or that materially and adversely affect the Selling Fund's business.
The opinion may state that counsel does not express any opinion or belief
as to the Financial Statements or other financial data, or as to the information
relating to the Vanguard Trust or the Acquiring Fund, contained in the Proxy
Statement or the Registration Statement, and that such opinion is solely for the
benefit of the Vanguard Trust and its directors and officers. The opinion also
will include such other matters incident to the transaction contemplated by this
Agreement as the Fund may reasonably request.
In this paragraph 7.4, references to the Proxy Statement include and relate
only to the text of the Proxy Statement and not to any exhibits or attachments
to the Proxy Statement or to any documents incorporated by reference in the
Proxy Statement.
15
7.5 The Vanguard Trust will have received on the Closing Date a favorable
opinion of the General Counsel of Xxxxxxxx Fund Advisors Inc. ("SFA") and
Secretary to the Xxxxxxxx Trust (the "Xxxxxxxx Officer"), dated as of the
Closing Date, in a form reasonably satisfactory to the Vanguard Trust, that the
description of the Xxxxxxxx Trust, the Selling Fund, and Xxxxxxxx Management in
the Proxy Statement is accurate in all material respects and fairly present the
information required to be shown.
The Xxxxxxxx Officer also will state that such person has participated in
conferences with officers and other representatives of the Xxxxxxxx Trust at
which the contents of the Proxy Statement and related matters were discussed
and, although such person is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Proxy Statement (except to the extent indicated in this
paragraph 7.5), on the basis of the foregoing information (relying as to
materiality to a large extent upon the opinions of officers and other
representatives of the Xxxxxxxx Trust), she does not believe that the Proxy
Statement as of its date, as of the date of the Selling Fund's shareholder
meeting, and as of the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated in the Proxy
Statement regarding the Selling Fund or necessary in the light of the
circumstances under which they were made, to make the statements in the Proxy
Statement regarding the Selling Fund not misleading. The opinion referred to in
this paragraph 7.5 shall be given by the Xxxxxxxx Officer solely in her capacity
as an officer of SFA and the Xxxxxxxx Trust, and not personally.
In this paragraph 7.5, references to the Proxy Statement include and relate
only to the text of the Proxy Statement and not to any exhibits or attachments
to the Proxy Statement or to any documents incorporated by reference in the
Proxy Statement.
7.6 The Vanguard Trust will have received from PricewaterhouseCoopers LLP a
letter addressed to the Vanguard Trust dated as of the effective date of the
Registration Statement in form and substance satisfactory to the Vanguard Trust,
to the effect that:
(a) they are independent public accountants with respect to the Xxxxxxxx
Trust within the meaning of the 1933 Act and the applicable regulations under
the 1933 Act;
(b) in their opinion, the Financial Statements and Financial Highlights of
the Selling Fund included or incorporated by reference in the Registration
Statement and reported on by them comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the rules and
regulations under the 1933 Act; and
(c) on the basis of limited procedures agreed upon by the Vanguard Trust
and the Xxxxxxxx Trust and described in the letter (but not an examination in
accordance with generally accepted auditing standards), the specified
information relating to the Selling Fund appearing in the Registration Statement
and the Proxy Statement has been obtained from the accounting records of the
Selling Fund or from schedules prepared by officers of the Xxxxxxxx Trust having
responsibility for financial and reporting matters and the information is in
agreement with these records, schedules or computations made from those
documents.
16
7.7 The Xxxxxxxx Trust will have delivered to the Vanguard Trust copies of
Financial Statements of the Selling Fund as of and for its most recently
completed fiscal year.
7.8 The Vanguard Trust shall have received from PricewaterhouseCoopers LLP
a letter addressed both to the Vanguard Trust and the Xxxxxxxx Trust, dated as
of the Closing Date, stating that, as of a date no more than three (3) business
days prior to the Closing Date, PricewaterhouseCoopers LLP performed limited
procedures and that on the basis of those procedures it confirmed the matters
set forth in paragraph 7.6(c).
ARTICLE VIII
Further Conditions Precedent to Obligations of
the Acquiring Fund and the Selling Fund
----------------------------------------------------
8.1 The Agreement and the transactions contemplated in the Agreement will
have been approved by the requisite vote of the holders of the outstanding
shares of the Selling Fund in accordance with the provisions of the Xxxxxxxx
Trust's Declaration of Trust and applicable law and certified copies of the
votes evidencing the approval will have been delivered to the Acquiring Fund.
8.2 On the Closing Date, no action, suit or other proceeding will be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with, this
Agreement or the transactions contemplated by this Agreement. On the Closing
Date, the Commission will not have issued an unfavorable report under Section
25(b) of the 1940 Act, nor instituted any proceeding seeking to enjoin the
consummation of the transactions contemplated by this Agreement under Section
25(c) of the 1940 Act, and no action, suit or other proceeding will be
threatened or pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief in connection
with, this Agreement or the transactions contemplated by this Agreement.
8.3 All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities (including those of
the Commission and of state blue sky and securities authorities, including
no-action positions of and exemptive orders from federal and state authorities)
deemed necessary by the Vanguard Trust or the Xxxxxxxx Trust to permit
consummation, in all material respects, of the transactions contemplated by this
Agreement will have been obtained, except if the failure to obtain any such
consent, order or permit would not involve a risk of a material adverse effect
on the assets or properties of the Acquiring Fund or the Selling Fund, provided
that either the Vanguard Trust or the Xxxxxxxx Trust may for itself waive any of
the conditions in this paragraph 8.3.
8.4 The Vanguard Trust Registration Statement and the Registration
Statement will each have become effective under the 1933 Act and no stop orders
suspending the effectiveness of the Vanguard Trust Registration Statement and
the Registration Statement will have been issued and, to the best knowledge of
the Vanguard Trust or the Xxxxxxxx Trust, no investigation or proceeding for
that purpose will have been instituted or be pending, threatened or contemplated
under the 1933 Act.
17
8.5 The parties will have received a favorable opinion of Xxxxxx, Xxxxx &
Bockius, LLP,, addressed to, and in form and substance satisfactory to the
Xxxxxxxx Trust substantially to the effect that, provided the acquisition
contemplated hereby is carried out in accordance with this Agreement and based
upon customary certificates with respect to matters of fact from the officers of
the Xxxxxxxx Trust and the Vanguard Trust, that for federal income tax purposes:
(a) the transfer of all or substantially all of the Selling Fund's assets
in exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund
of the Liabilities of the Selling Fund will constitute a "reorganization" within
the meaning of Section 368(a)(1)(F) of the Code and the Acquiring Fund and the
Selling Fund are each a "party to a reorganization" within the meaning of
Section 368(b) of the Code; (b) no gain or loss will be recognized by the
Acquiring Fund upon the receipt of the assets of the Selling Fund solely in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of
the Liabilities of the Selling Fund; however, no opinion will be expressed as to
whether any accrued market discount will be required to be recognized as
ordinary income; (c) no gain or loss will be recognized by the Selling Fund upon
the transfer of the Selling Fund's assets to the Acquiring Fund in exchange for
the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
Liabilities of the Selling Fund or upon the distribution of the Acquiring Fund
Shares to the Selling Fund's shareholders in exchange for their shares of the
Selling Fund; (d) no gain or loss will be recognized by shareholders of the
Selling Fund upon the exchange of their Selling Fund Shares for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of the Liabilities of the
Selling Fund; (e) the aggregate tax basis for the Acquiring Fund Shares received
by each of the Selling Fund Shareholders pursuant to the Reorganization will be
the same as the aggregate tax basis of the Selling Fund Shares held by the
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Selling Fund shareholder will
include the period during which the Selling Fund Shares exchanged for the
Acquiring Fund Shares were held by the shareholder (provided that the Selling
Fund Shares were held as capital assets on the date of the Reorganization); and
(f) the tax basis of the Selling Fund's assets acquired by the Acquiring Fund
will be the same as the tax basis of the assets to the Selling Fund immediately
prior to the Reorganization, and the holding period of the assets of the Selling
Fund in the hands of the Acquiring Fund will include the period during which
those assets were held by the Selling Fund.
Notwithstanding anything in this Agreement to the contrary, neither the
Vanguard Trust nor the Xxxxxxxx Trust may waive the conditions set out in this
paragraph 8.5.
18
ARTICLE IX
Brokerage Fees and Expenses; Other Agreements
---------------------------------------------
9.1 The Vanguard Trust represents and warrants to the Xxxxxxxx Trust, and
the Xxxxxxxx Trust represents and warrants to the Vanguard Trust, that no
brokers or finders or other entities are entitled to receive any payments in
connection with the transactions provided for in this Agreement.
9.2 The Vanguard Group, the Xxxxxxxx Trust and Xxxxxxxx Management shall
each bear the fees, costs, and expenses incurred in connection with the
transactions contemplated by this Agreement in the manner set forth in the Fund
Sponsorship Agreement, dated February 4, 2002, to which The Vanguard Group and
Xxxxxxxx Management are parties; provided, however, that (i) the Acquiring Fund
shall bear the fees, costs, and expenses of PricewaterhouseCoopers LLP in
performing the audit of the financial statements of the Selling Fund and the
Acquiring Fund for the fiscal year ending October 31, 2002, and (ii) the fees,
costs, and expenses of PricewaterhouseCoopers LLP in performing the limited
procedures and issuing the related letter pursuant to paragraphs 7.6 and 7.8
(the "Limited Procedures Expenses") shall be shared equally by The Vanguard
Group and the Xxxxxxxx Trust.
9.3 (a) Xxxxxxxx Management will indemnify and hold harmless the
Vanguard Trust, the Acquiring Fund, The Vanguard Group, their directors,
officers, employees, and affiliates (each, a "Vanguard Indemnified Party"), from
and against any and all damages, costs and expenses (including reasonable
attorney's fees and costs) incurred by any of them as a result of any breach or
failure of the Xxxxxxxx Trust's representations or warranties under this
Agreement, or as a result of any willful misconduct or gross negligence by the
Xxxxxxxx Trust in the performance (or failure to perform) of the Xxxxxxxx
Trust's obligations under this Agreement.
(b) Xxxxxxxx Management's agreement to indemnify a Vanguard Indemnified
Party pursuant to this paragraph 9.3 is expressly conditioned upon Xxxxxxxx
Management's being promptly notified of any action or claim brought against any
Vanguard Indemnified Party after that party receives notice of the action. The
failure of a Vanguard Indemnified Party to notify Xxxxxxxx Management will not
relieve Xxxxxxxx Management from any liability that Xxxxxxxx Management may have
otherwise than on account of this indemnification agreement.
(c) In case any action or claim is brought against any Vanguard Indemnified
Party and that party timely notifies Xxxxxxxx Management of the commencement of
the action or claim, Xxxxxxxx Management will be entitled to participate in and,
to the extent that it wishes to do so, to assume the defense of the action or
claim with counsel satisfactory to it. If Schroder Management decides to assume
the defense of the action, Schroder Management will not be liable to the
Vanguard Indemnified Party for any legal or other expenses subsequently incurred
by the Vanguard Indemnified Party in connection with the defense of the action
or claim other than: (i) reasonable costs of investigation or the furnishing of
documents or witnesses and (ii) all reasonable fees and expenses of separate
counsel to the Vanguard Indemnified Party if the Vanguard Indemnified Party has
concluded reasonably that representation of Schroder Management and the Vanguard
Indemnified Party would be inappropriate as a result of actual or potential
differing interests between them in the conduct of the defense of such action.
19
9.4 (a) The Vanguard Group will indemnify and hold harmless the Schroder
Trust, the Selling Fund, Schroder Management, their directors, officers,
employees and affiliates (each, a "Schroder Indemnified Party") from and against
any and all damages (including reasonable attorney's fees and costs) incurred by
any of them as a result of any breach or failure of the Vanguard Trust's
representations or warranties under this Agreement, or as a result of any
willful misconduct or gross negligence by the Vanguard Trust in the performance
(or failure to perform) of the Vanguard Trust's obligations under this
Agreement.
(b) The Vanguard Group's agreement to indemnify a Schroder Indemnified
Party pursuant to this paragraph 9.4 is expressly conditioned upon The Vanguard
Group's being promptly notified of any action or claim brought against any
Schroder Indemnified Party after that party receives notice of the action. The
failure of a Schroder Indemnified Party to notify The Vanguard Group will not
relieve The Vanguard Group from any liability that The Vanguard Group may have
otherwise than on account of this indemnification agreement.
(c) In case any action or claim is brought against any Schroder Indemnified
Party and that party timely notifies The Vanguard Group of the commencement of
the action or claim, The Vanguard Group will be entitled to participate in and,
to the extent that it wishes to do so, to assume the defense of the action or
claim with counsel satisfactory to it. If The Vanguard Group decides to assume
the defense of the action, The Vanguard Group will not be liable to the Schroder
Indemnified Party for any legal or other expenses subsequently incurred by the
Schroder Indemnified Party in connection with the defense of the action or claim
other than: (i) reasonable costs of investigation or the furnishing of documents
or witnesses and (ii) all reasonable fees and expenses of separate counsel to
the Schroder Indemnified Party if the Schroder Indemnified Party has concluded
reasonably that representation of The Vanguard Group and the Schroder
Indemnified Party would be inappropriate as a result of actual or potential
differing interest between them in the conduct of the defense as a result of the
action.
ARTICLE X
Entire Agreement; Survival of Representations, Warranties and Covenants
-----------------------------------------------------------------------
10.1 The Vanguard Trust and the Schroder Trust agree that neither of them
has made any representation, warranty or covenant not set forth in this
Agreement and that this Agreement represents the entire agreement among them.
10.2 The representations, warranties and covenants contained in this
Agreement or in any document delivered in accordance with its terms will survive
the consummation of the transactions contemplated under this Agreement.
20
ARTICLE XI
Termination
-----------
11.1 This Agreement may be terminated at any time at or prior to the
Closing Date by: (i) mutual agreement of the Schroder Trust and the Vanguard
Trust; (ii) the Schroder Trust, in the event the Vanguard Trust has, or the
Vanguard Trust in the event the Schroder Trust has, materially breached any
representation, warranty or agreement contained in this Agreement to be
performed at or prior to the Closing Date; or (iii) the Schroder Trust, or the
Vanguard Trust in the event a condition included in this Agreement expressed to
be precedent to the obligations of the terminating party or parties has not been
met and it reasonably appears that it will not or cannot be met.
11.2 In the event of any such termination, the Vanguard Trust or the
Schroder Trust, or their respective directors or officers, will not be liable to
the other party or parties.
ARTICLE XII
Amendments
----------
This Agreement may be amended, modified or supplemented in writing in such
manner as may be mutually agreed upon by the authorized officers of the Vanguard
Trust and the Schroder Trust; provided, however, that following the meeting of
the Selling Fund's shareholders called pursuant to paragraph 5.2 of this
Agreement, no amendment may have the effect of changing the provisions for
determining the number of the Acquiring Fund Shares to be issued to the Selling
Fund's Shareholders under this Agreement to the detriment of the shareholders
without their further approval.
ARTICLE XIII
Notices
-------
13.1 Any notice, report, statement or demand required or permitted by any
provisions of this Agreement will be in writing and given by prepaid telegraph,
telecopy, or certified mail as follows:
If to the Vanguard Trust, at:
Vanguard Whitehall Funds
X.X. Xxx 0000
Xxxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
21
With a copy to:
Xxxxxx, Xxxxx & Bockius LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Schroder Trust, at:
Xxxxxxxx Capital Funds (Delaware)
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
With a copy to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
ARTICLE XIV
Headings; Counterparts; Governing Law; Assignment; Limitation of Liability
--------------------------------------------------------------------------
14.1 The article and paragraph headings contained in this Agreement are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
14.2 This Agreement may be executed in any number of counterparts, each of
which will be deemed an original.
14.3 This Agreement shall be governed by and construed in accordance with
the laws (without giving effect to the conflicts-of-law principles thereof) of
the Commonwealth of Pennsylvania.
14.4 This Agreement will bind and inure to the benefit of the parties to
the Agreement and their respective successors and assigns, but no assignment or
transfer of the Agreement or of any rights or obligations under the Agreement
may be made by either party without the written consent of the other party.
22
Nothing expressed or implied in this Agreement is intended or may be construed
to confer upon or give any person, firm or corporation, other than the parties
to the Agreement and their respective successors and assigns, any rights or
remedies under or by reason of this Agreement.
14.5 The Schroder Trust is executing this Agreement solely on behalf of the
Selling Fund. References to the "Schroder Trust" shall be construed to refer
solely to the Schroder Trust acting on behalf of the Selling Fund, and no
liability shall accrue to the Schroder Trust generally or to any other fund in
respect of this Agreement or any of the obligations hereunder, and each of the
parties will look only to the assets of the Selling Fund for satisfaction of any
obligation or liability arising under or in respect of this Agreement.
Notice is hereby given that this instrument is executed on behalf of the
Trustees of the Schroder Trust as Trustees and not individually, and that the
obligations of or arising out of this instrument are not binding upon any of the
Trustees, officers, or shareholders individually but are binding only upon the
assets and property of the Selling Fund.
14.6 The Vanguard Trust is executing this Agreement solely on behalf of the
Acquiring Fund. References to the "Vanguard Trust" shall be construed to refer
solely to the Vanguard Trust acting on behalf of the Acquiring Fund, and no
liability shall accrue to the Vanguard Trust generally or to any other fund in
respect of this Agreement or any of the obligations hereunder, and each of the
parties will look only to the assets of the Acquiring Fund for satisfaction of
any obligation or liability arising under or in respect of this Agreement.
Notice is hereby given that this instrument is executed on behalf of the
Trustees of the Vanguard Trust as Trustees and not individually, and that the
obligations of or arising out of this instrument are not binding upon any of the
Trustees, officers, or shareholders individually but are binding only upon the
assets and property of the Acquiring Fund.
* * * * *
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan
of Reorganization to be executed as of the date first set forth herein.
XXXXXXXX CAPITAL FUNDS (DELAWARE) VANGUARD WHITEHALL FUNDS
----------------------------------- ------------------------------------
Signature Date Signature Date
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Print Name Title Print Name Title
XXXXXXXX INVESTMENT MANAGEMENT THE VANGUARD GROUP (as to the
NORTH AMERICA INC. (as to the provisions of provisions of
Paragraphs 9.2 and 9.3 only) Paragraphs 9.2 and 9.4 only)
----------------------------------- ------------------------------------
Signature Date Signature Date
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Print Name Title Print Name Title
24
