AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of ____, 2000 between Vanguard Fenway Funds, a business trust
formed under the laws of the State of Delaware with its principal place of
business at P.O. Box 2600, Valley Forge, PA 19482 (the "Vanguard Fund"), on
behalf of Vanguard Growth Equity Fund, a series of the Vanguard Fund (the
"Acquiring Fund"), and TIP Funds, a business trust formed under the laws of the
Commonwealth of Massachusetts with its principal place of business at 530 East
Swedesford Road, Wayne, PA 19087 ("TIP Funds"), on behalf of the Turner Growth
Equity Fund, a series of TIP Funds (the "Selling Fund").
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
shares of the common stock (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 below, 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 Fund and TIP Funds are each registered as an open-end
management investment company under the Investment Company Act of 1940 (the
"1940 Act") and the Acquiring Fund is permitted to invest in securities held by
the Selling Fund;
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 Fund
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; and
WHEREAS, the Board of Trustees, including a majority of the trustees who
are not "interested persons" (as defined under the 1940 Act) of TIP Funds has
determined with respect to the Selling Fund that the exchange of all the assets
of the Selling Fund for the Acquiring Fund Shares is in the best interests of
the Selling Fund and its shareholders;
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In consideration of the mutual promises contained in this Agreement, the
Vanguard Fund and TIP Funds agree as follows:
ARTICLE I
Transfer of Assets of the Selling Fund in Exchange for Acquiring Fund Shares and
Assumption of Selling Fund Liabilities and 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, TIP
Funds 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 Fund
agrees in exchange for the 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(a) The assets of the Selling Fund to be acquired by the Acquiring Fund
will consist of all property 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").
(b) TIP Funds, on behalf of the Selling Fund, has provided the Vanguard
Fund with TIP Funds' most recent financial statements, which contain a list of
all of the Selling Fund's assets as of the date of execution of this Agreement.
TIP Funds, 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. TIP Funds, on
behalf of the Selling Fund, reserves the right to sell any of the Selling Fund's
assets but will not, without the prior approval of the Vanguard Fund, acquire
any additional assets for the Selling Fund other than instruments of the type in
which the Acquiring Fund is permitted to invest. TIP Funds, on behalf of the
Selling Fund, will, within a reasonable time prior to the Closing Date, furnish
the Vanguard Fund 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 the assets prior to the
Closing Date.
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1.3 TIP Funds, 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 paragraph 1.3 of this Agreement, the Acquiring Fund
will assume the liabilities, expenses, costs, charges and reserves reflected on
a Statement of Assets and Liabilities of the Selling Fund 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 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 As soon as practicable after distribution of the Acquiring Fund Shares
pursuant to paragraph 1.4 of this Agreement but in any event within 180 calendar
days after the Closing Date the Selling Fund will be terminated as a series of
TIP Funds ("Termination Date"). In addition, TIP Funds 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 shares of the Selling Fund
("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 applicable
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 Fund, subject to this Article II.
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ARTICLE III
Closing and Closing Date.
3.1 The Closing Date for the Reorganization will be June 5, 2000, or any
other date agreed to in writing by the Vanguard Fund and TIP Funds. 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 Fund, 100 Vanguard
Blvd., Malvern, PA 19355, or at such other time and/or place agreed to by the
Vanguard Fund and TIP Funds.
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 will 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, will 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 applicable 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 TIP Funds, 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 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 Fund, on behalf of the Acquiring
Fund, will issue and deliver a confirmation evidencing the Acquiring Fund Shares
to be credited to the Selling Fund's account on the Closing Date to the
Secretary of TIP Funds or provide evidence satisfactory to TIP Funds 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.
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ARTICLE IV
Representations and Warranties.
4.1 TIP Funds, on behalf of the Selling Fund, represents and warrants to
the Vanguard Fund as follows:
(a) The Selling Fund is an investment series of TIP Funds, a business
trust duly organized, validly existing, and in good standing under the laws
of the Commonwealth of Massachusetts;
(b) TIP Funds 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) TIP Funds 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 Declaration of Trust or
any material agreement, indenture, instrument, contract, lease or other
undertaking to which TIP Funds on behalf of itself or on behalf of the
Selling Fund is a party or by which its property is bound;
(d) TIP Funds 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 Fund at the Closing;
(e) TIP Funds has no contracts or other commitments (other than this
Agreement) with respect to the Selling Fund that will be terminated with
liability to TIP Funds prior to the Closing Date;
(f) Except as previously disclosed in writing to and accepted by the
Vanguard Fund, no litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending, or to TIP
Funds' knowledge, threatened against TIP Funds in connection with the
Selling Fund or any of its properties or assets that, if adversely
determined, would materially and adversely affect TIP Funds' financial
condition or the conduct of its business. TIP Funds 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 TIP Funds' ability to
consummate the transactions contemplated by this Agreement;
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(g) The statements of assets and liabilities of TIP Funds relating to
the Selling Fund for the period beginning with commencement of the Selling
Fund and ending on September 30, 1999 have been audited by Ernst & Young
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 September 30, 1999, 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 Fund. 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;
(j) At the Closing Date, all federal and other tax returns and reports
with respect to the Selling 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 and, to the best of TIP Funds' knowledge, no such
tax return is currently under audit and no assessment has been asserted
with respect to such a return;
(h) For each of its prior fiscal years of operation, TIP Funds 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 shares
of the Selling Fund 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 shares of the Selling Fund will, at the time of Closing, be
held by the persons and the amounts set out in the records of TIP Funds'
transfer agent as provided in paragraph 3.4 of this Agreement. TIP Funds
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 applicable Closing Date, TIP Funds will have good and
marketable title to the Selling Fund's assets to be transferred to the
Acquiring Fund pursuant to
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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 Fund;
(m) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions on the part of TIP Funds' Board of
Trustees and, subject to the approval of the Selling Fund Shareholders,
this Agreement will constitute a valid and binding obligation of TIP Funds,
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 TIP Funds 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;
(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 TIP Funds' registration statement on
Form N-1A relating 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.
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4.2 The Vanguard Fund, on behalf of the Acquiring Fund, represents and
warrants to TIP Funds 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 Fund 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 Fund'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 Fund 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 Fund
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 Fund 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 Fund 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 TIP
Funds, no litigation or administrative proceeding or investigation of or
before any court or governmental body is presently pending or, to the
Vanguard Fund's knowledge, threatened against the Vanguard Fund in
connection with the Acquiring Fund or any of its properties or assets that,
if adversely determined, would materially and adversely affect the Vanguard
Fund's financial condition or the conduct of its business. The Vanguard
Fund 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 Fund'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
TIP Funds. 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;
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(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 Fund 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
Fund 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 Fund's
Board of Trustees, and this Agreement will constitute a valid and binding
obligation of the Vanguard Fund 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 Fund 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;
(m) 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 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
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(n) The Vanguard Fund 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 Fund will operate the business of the Acquiring Fund, and
TIP Funds will operate the business of the Selling Fund, in the ordinary course
between the date of this Agreement and the Closing Date. The Vanguard Fund and
TIP Funds 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 TIP Funds, 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 Fund necessary to obtain approval of
the transactions contemplated by this Agreement.
5.3 TIP Funds, 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 TIP Funds, on behalf of the Selling Fund, will assist the Vanguard Fund
in obtaining all information that the Vanguard Fund reasonably requests
concerning the beneficial ownership of the Selling Fund's Shares.
5.5 Subject to the provisions of this Agreement, the Vanguard Fund and TIP
Funds 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.
5.6 As promptly as practicable, but in any case within forty-five calendar
days after the Closing Date, TIP Funds will furnish the Vanguard Fund, in such
form as is reasonably satisfactory to the Vanguard Fund, a statement of the
earnings and profits of the Selling Fund for federal income tax purposes that
will be carried over to the Acquiring Fund as a result of Section 381 of the
Code, and that will be certified by the Selling Fund's President and its
Treasurer.
5.7 TIP Funds, on behalf of the Selling Fund, will provide the Vanguard
Fund 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 Fund (the "Registration
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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 shareholder 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, TIP Funds, on behalf of the Selling Fund, will furnish the
Vanguard Fund 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 applicable Closing Date against
sales of the Acquiring Fund Shares; and TIP Funds agrees that it will not net
redemptions during that period by the Selling Fund against sales of shares of
any other series of TIP Funds.
ARTICLE VI
Conditions Precedent to the Obligations of TIP Funds.
The obligations of TIP Funds to consummate the transactions provided for in
this Agreement will be subject, at its election, to the performance by the
Vanguard Fund 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 Fund 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 Fund will have delivered to TIP Funds 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 reasonably
satisfactory to TIP Funds and dated as of the Closing Date, to the effect that
the representations and warranties of the Vanguard Fund 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 TIP Funds may reasonably request.
6.3 TIP Funds will have received on the Closing Date a favorable opinion
from Shearman & Sterling, counsel to the Vanguard Fund, dated as of the Closing
Date, in a form reasonably satisfactory to TIP Funds, covering the following
points:
(a) the Acquiring Fund is a separate series of the Vanguard Fund, a
business trust duly organized, validly existing and in good standing under the
laws of the State of Delaware and the Vanguard Fund 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;
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(b) the Vanguard Fund 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 Fund 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 TIP Funds, is a valid and binding
obligation of the Vanguard Fund enforceable against the Vanguard Fund 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 nonassessable 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 Fund'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 Fund 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 Fund 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 required for the consummation by the Vanguard
Fund 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 Fund or the Acquiring Fund, 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 and fairly present the information required to be shown;
13
(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 Fund 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 Fund 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 Fund at which the contents of
the Proxy Statement, the Vanguard Fund 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 Fund 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 Fund), they do not believe
that the Proxy Statement and the Vanguard Fund 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 Fund Registration Statement or necessary to make the
statements in the Proxy Statement and the Vanguard Fund 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 TIP Funds or the Selling Fund, contained in the Proxy Statement,
Registration Statement or the Vanguard Fund Registration Statement, and that the
opinion is solely for the benefit of TIP Funds 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 TIP Funds
may reasonably request.
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.
14
ARTICLE VII
Conditions Precedent to the Obligations of the Vanguard Fund.
The obligations of the Vanguard Fund to complete the transactions provided
for in this Agreement will be subject, at its election, to the performance by
TIP Funds 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 TIP Funds 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 TIP Funds will have delivered to the Vanguard Fund 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 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 TIP Funds;
7.3 TIP Funds will have delivered to the Vanguard Fund 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 Fund and dated as of the Closing
Date, to the effect that the representations and warranties of TIP Funds 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 Fund shall reasonably request; and
7.4 The Vanguard Fund will have received on the Closing Date a favorable
opinion of Morgan, Lewis & Bockius LLP, counsel to TIP Funds, dated as of the
Closing Date, in a form reasonably satisfactory to the Vanguard Fund, covering
the following points:
(a) the Selling Fund is a separate investment series of TIP Funds, a
business trust that is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts and TIP Funds 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) TIP Funds is registered as an investment company under the 1940
Act and, to such counsel's knowledge, TIP Funds' registration 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
TIP Funds 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
15
those laws and, assuming due authorization, execution and delivery of the
Agreement by the Vanguard Fund, is a valid and binding obligation of TIP Funds
enforceable against TIP Funds 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 TIP Funds' Declaration of Trust or a material violation of any
provision of any agreement (known to such counsel) to which TIP Funds 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 TIP Funds 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 Commonwealth of Massachusetts is required for the consummation by TIP
Funds 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) the descriptions in the Proxy Statement under the captions [add
relevant caption headings], insofar as they relate to TIP Funds, are accurate
and fairly present the information required to be shown; and
(g) 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 TIP Funds 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.
Counsel also will state that they have participated in conferences with
officers and other representatives of TIP Funds at which the contents of the
Proxy 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 (except to the
extent indicated in paragraph (f) of their above opinion), on the basis of the
foregoing information (relying as to materiality to a large extent upon the
opinions of officers and other representatives of TIP Funds), they do 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
16
which they were made, to make the statements in the Proxy Statement regarding
the Selling Fund 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 Vanguard Fund 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 Fund 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.
7.5 The Vanguard Fund will have received from Ernst & Young LLP a letter
addressed to the Vanguard Fund dated as of the effective date of the
Registration Statement in form and substance satisfactory to the Vanguard Fund,
to the effect that:
(a) they are independent public accountants with respect to TIP Funds
within the meaning of the 1933 Act and the applicable regulations under the 1933
Act;
(b) in their opinion, the financial statements and per share income
and capital changes 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;
(c) on the basis of limited procedures agreed upon by the Vanguard
Fund and TIP Funds and described in the letter (but not an audit in accordance
with generally accepted auditing standards) with respect to the unaudited pro
forma financial statements of the Selling Fund included in the Registration
Statement and the Proxy Statement, and inquiries of appropriate officials of TIP
Funds or the officers of TIP Funds responsible for financial and accounting
matters, nothing came to their attention that caused them to believe that (i)
the unaudited pro forma financial statements do not 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, or (ii) the unaudited pro
forma financial statements are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements; and
(d) on the basis of limited procedures agreed upon by the Vanguard
Fund and TIP Funds and described in the letter (but not an examination in
accordance with generally accepted auditing standards), the information relating
to the Selling Fund appearing in the Registration Statement and the Proxy
Statement that is expressed in dollars or percentages of
17
dollars (with the exception of performance comparisons) has been obtained from
the accounting records of the Selling Fund or from schedules prepared by
officers of TIP Funds having responsibility for financial and reporting matters
and the information is in agreement with these records, schedules or
computations made from those documents.
7.6 TIP Funds will have delivered to the Vanguard Fund, pursuant to
paragraph 4.1(f) of this Agreement, copies of financial statements of the
Selling Fund as of and for its most recently completed fiscal year.
7.7 The Vanguard Fund will have received from Ernst & Young LLP a letter
addressed to the Vanguard Fund and dated as of the applicable Closing Date
stating that as of a date no more than three business days prior to the
applicable Closing Date, Ernst & Young LLC performed limited procedures in
connection with TIP Funds' most recent unaudited financial statements relating
to the Selling Fund and that (a) nothing came to their attention in performing
the limited procedures or otherwise that led them to believe that any changes
had occurred in the assets, liabilities, net assets, net investment income, net
increase (decrease) in net assets from operations or net increase (decrease) in
net assets as compared with amounts as of the Selling Fund's most recent audited
fiscal year end or the corresponding period in the Selling Fund's most recent
audited fiscal year, other than changes occurring in the ordinary course of
business and (b) based on the limited procedures, no change has occurred in
their report on the most recent audited financial statements of TIP Funds
relating to the Selling Fund.
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 TIP Funds'
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.
18
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 Fund or TIP Funds 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 Fund or TIP Funds may for itself waive any of the conditions in this
paragraph 8.3.
8.4 The Vanguard Fund 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 Fund Registration Statement and the
Registration Statement will have been issued and, to the best knowledge of the
Vanguard Fund or TIP Funds, no investigation or proceeding for that purpose will
have been instituted or be pending, threatened or contemplated under the 1933
Act.
8.5 The parties will have received a favorable opinion of Stradley Ronon
Stevens & Young, LLP, addressed to, and in form and substance satisfactory to
TIP Funds substantially to the effect that, provided the acquisition
contemplated hereby is carried out in accordance with this Agreement and based
upon certificates with respect to matters of fact from the officers of TIP Funds
and the Vanguard Fund, 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 (whether actual or
constructive) 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
19
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 Fund nor TIP Funds may waive the conditions set out in this paragraph
8.5.
ARTICLE IX
Brokerage Fees and Expenses; Other Agreements.
9.1 The Vanguard Fund represents and warrants to TIP Funds, and TIP Funds
represents and warrants to the Vanguard Fund, 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 Fund or its affiliates agrees to bear certain of the
expenses incurred in connection with the transactions contemplated by this
Agreement, whether or not consummated (excluding extraordinary expenses such as
litigation expenses, damages and other expenses not normally associated with
transactions of the type contemplated by this Agreement). These expenses consist
of: (i) expenses incurred by Vanguard in connection with preparing this
Agreement and the Registration Statement; (ii) expenses incurred by Vanguard in
connection with preparing and filing the Vanguard Fund Registration Statement;
(iii) fees and expenses of preparing and filing such forms for notification
purposes, if required under applicable state securities laws with respect to the
Acquiring Fund Shares to be issued in connection with the Reorganization; and
(iv) postage, printing, accounting fees, and legal fees incurred in connection
with the transactions contemplated by this Agreement.
9.3 TIP Funds or its affiliates agrees to bear certain of the expenses
incurred in connection with the transactions contemplated by this Agreement.
These expenses consist of (i) expenses incurred by TIP Funds in connection with
preparing this Agreement and the Registration Statement; (ii) expenses
associated with preparing the Proxy Statement; and (iii) solicitation costs and
expenses incurred in connection with the shareholders meeting referred to in
paragraph 5.2 of this Agreement.
9.4 (a) TIP Funds or its affiliates ("Turner") will indemnify and hold
harmless the Vanguard Fund, the Acquiring Fund, The Vanguard Group, Inc., their
directors, officers, employees, and affiliates (each, a "Turner Indemnified
Party"), from and against any and all
20
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 TIP Funds'
representations or warranties under this Agreement, or as a result of any
willful misconduct or negligence by TIP Funds in the performance (or failure to
perform) of TIP Funds' obligations under this Agreement.
(b) Turner's agreement to indemnify a Turner Indemnified Party
pursuant to paragraph 9.4(a) is expressly conditioned upon Turner's being
promptly notified of any action or claim brought against any Turner Indemnified
Party after that party receives notice of the action. The failure of a Turner
Indemnified Party to notify Turner will not relieve Turner from any liability
that Turner may have otherwise than on account of this indemnification
agreement.
(c) In case any action or claim is brought against any Turner
Indemnified Party and that party timely notifies Turner of the commencement of
the action or claim, Turner 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 Turner decides to assume the defense of the
action, Turner will not be liable to the Turner Indemnified Party for any legal
or other expenses subsequently incurred by the Turner 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 Turner Indemnified Party
if the Turner Indemnified Party has concluded reasonably that representation of
Turner and the Turner 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.
9.5 (a) The Vanguard Fund or its affiliates ("Vanguard") will indemnify and
hold harmless TIP Funds, the Selling Fund, Turner Investment Partners, Inc.,
their directors, officers, employees and affiliates (each, a "Vanguard
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 Fund's representations or warranties under this
Agreement, or as a result of any willful misconduct or negligence by the
Vanguard Fund in the performance (or failure to perform) of the Vanguard Fund's
obligations under this Agreement.
(b) Vanguard's agreement to indemnify a Vanguard Indemnified Party
pursuant to this paragraph 9.5(b) is expressly conditioned upon Vanguard'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 Vanguard will not relieve Vanguard from
any liability that Vanguard 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 Vanguard of the commencement of
the action or claim, Vanguard 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 Vanguard decides to assume the
21
defense of the action, Vanguard 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 Vanguard and the Vanguard 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 Warranties.
10.1 The Vanguard Fund and TIP Funds 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.
11.1 This Agreement may be terminated at any time at or prior to the
Closing Date by: (i) mutual agreement of TIP Funds and the Vanguard Fund; (ii)
TIP Funds, in the event the Vanguard Fund has, or the Vanguard Fund in the event
TIP Funds has, materially breached any representation, warranty or agreement
contained in this Agreement to be performed at or prior to the Closing Date; or
(iii) TIP Funds, or the Vanguard Fund 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 Fund or TIP Funds,
or their respective directors or officers, will not be liable to the other party
or parties.
ARTICLE XII
Amendments.
22
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
Fund and TIP Funds; 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 addressed to TIP Funds:
530 East Swedesford Road,
Wayne, PA 19087
Attention:
with a copy to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103
Attention: Edward B. Baer, Esq.
or to the Vanguard Fund at:
P.O. Box 2600
Valley Forge, PA 19482
Attention: Suzanne F. Barton, Esq.
with a copy to:
Shearman & Sterling
` 1801 Pennsylvania Ave., N.W.
Suite 900
Washington, D.C. 20004
Attention: Barry P. Barbash, Esq.
23
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 will be governed by and construed in accordance with
the laws 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.
* * * * *
24
Each of the parties to this Agreement has caused this Agreement to be
executed by its Chief Executive Officer, President or Vice President, and
attested to by its Secretary or Assistant Secretary.
By: [Vanguard Fund]
Name:[_____________________]
Title:[_____________________]
By:[TIP Funds]
Name:[____________________]
Title:[____________________]
25