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
Assumption of Certain Identified Selling Fund Liabilities; Liquidation of the
Selling Fund
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
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
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
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
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violation of any provision of its 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 limitation, tax returns for the Selling Fund's
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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, if
adversely determined, would materially and adversely affect the Vanguard Trust's
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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
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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;
(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
5.1 The Vanguard Trust will operate the business of the Acquiring
Fund, and the Schroder 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 Schroder 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 Schroder 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 Schroder 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
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
11
Secretary, Treasurer or Assistant Treasurer, in a form 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;
(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
12
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 with the Commission as
14
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. 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
descriptions 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.
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.
16
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 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.
17
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 0000 Xxx.
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 and Xxxxxxxx Management each agree to 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 each is a party; 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 allocated
among The Vanguard Group and the Acquiring Fund as mutually agreed by such
parties; provided further, however, that the Limited Procedures Expenses may be
allocated among any combination of The Vanguard Group, the Acquiring Fund, and
the Selling Fund as separately agreed by such parties in writing prior to the
Closing Date.
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 Xxxxxxxx Management
decides to assume the defense of the action, Xxxxxxxx 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 Xxxxxxxx
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
Xxxxxxxx Trust, the Selling Fund, Xxxxxxxx Management, their directors,
officers, employees and affiliates (each, a "Xxxxxxxx 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 Xxxxxxxx
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 Xxxxxxxx Indemnified Party after that party receives notice of the
action. The failure of a Xxxxxxxx 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 Xxxxxxxx
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.
ARTICLE XI
Termination
20
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
With a copy to:
21
Xxxxxx, Xxxxx & Xxxxxxx 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.
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.
22
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 provisions of Paragraphs 9.2
of Paragraphs 9.2 and 9.3 only) and 9.4 only)
----------------------------------- ------------------------------------
Signature Date Signature Date
----------------------------------- ------------------------------------
Print Name Title Print Name Title
24
