Exhibit 4
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this _____ day of _________, 2002, between on Vanguard Whitehall Funds, a
business trust formed under the laws of the State of Delaware with its principal
place of business at on P.O. Box 2600, Valley Forge, PA 19482 (the "Vanguard
Trust"), on behalf of Vanguard Mid-Cap Fund, a series of the Vanguard Trust (the
"Acquiring Fund"), and PIC Investment Trust, a business trust formed under the
laws of the State of Delaware with its principal place of business at 300 North
Lake Avenue, Pasadena, California 91101-4106 (the "Provident Trust"), on behalf
of the Provident Investment Counsel Mid Cap Fund A, a series of the Provident
Trust (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 on (the "Reorganization") will consist of (i)
the transfer of all of the assets of the Selling Fund in exchange solely for
units of on 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 on of this Agreement), of
Acquiring Fund Shares to the shareholders of the Selling Fund in liquidation of
the Selling Fund as provided on in this Agreement, all upon the terms and
conditions set out below.
WHEREAS, the Vanguard Trust and the Provident Trust are each registered as
an open-end management investment company under on the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Selling Fund, in reliance on Section 12(d)(1)(E) of the 1940
Act, invests substantially all of its assets in on Shares of the PIC Mid Cap
Portfolio, a New York trust that is registered as an investment company under
the 1940 Act (the "Master on 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 on 1940 Act), of the Vanguard
Trust has determined with respect to the Acquiring Fund that the exchange of all
of the assets of the on 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 Provident
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 on
shareholders; and
WHEREAS, The purpose and effect of the Reorganization is to change the form
of organization of the Selling Fund from a on series of Provident Trust to a
series of the Vanguard Trust, and the parties anticipate that the Reorganization
will provide on long-term benefits to the Selling Fund and its shareholders by
immediately reducing expenses and providing access to a larger, more on diverse
complex of funds, which can appeal to a broader spectrum of investors, and thus
increase the size and efficiency of the on Acquiring 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 Provident on 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 on warranties contained in this Agreement,
the Provident Trust agrees to transfer the Selling Fund's assets in the manner
set out in on paragraph 1.2 of this Agreement to the Acquiring Fund, and the
Vanguard Trust agrees in exchange for such assets: (a) to deliver to on 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 on
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 on Fund including, without
limitation, all cash, securities, commodities and futures interests, and
dividend or interest receivables on 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 on closing date described in paragraph 3.1 of this Agreement (the
"Closing Date").
The Provident Trust, on behalf of the Selling Fund, shall have
provided on or before the date hereof the Vanguard on Trust with (a) the
financial statements of the Selling Fund as of and for its most recently
completed fiscal year (the "Financial on Statements"), and (b) a list of all of
the Selling Fund's assets as of the date of execution of this Agreement. The
Provident on Trust, on behalf of the Selling Fund, represents that as of the
date of the execution of this Agreement no changes have occurred in on 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
Provident 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 additional assets for the Selling Fund other
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than instruments of the type in which the Acquiring Fund is permitted to invest.
The Provident Trust, on behalf of the Selling Fund, will, within a reasonable
time prior to the Closing on 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
on this paragraph that do not conform to the Acquiring Fund's investment
objectives, policies and restrictions. In the event that the on Selling Fund
holds any assets that the Acquiring Fund may not hold, the Selling Fund will use
its best efforts to dispose of such on assets prior to the Closing Date.
1.3 The Provident Trust, on behalf of the Selling Fund, will seek to
discharge all of the Selling Fund's known on liabilities and obligations prior
to the Closing Date, other than those liabilities and obligations that would
otherwise be on discharged at a later date in the ordinary course of the Selling
Fund's business. Except as specifically provided in this paragraph on 1.3, the
Acquiring Fund will assume the liabilities, expenses, costs, charges and
reserves reflected on the Audited Statements of on Assets and Liabilities (as
defined in paragraph 4.1(g)) and the Unaudited Financial Statements (as defined
in paragraph 7.8), as on well as liabilities incurred in the ordinary course of
the Selling Fund's business occurring after the date of the Unaudited on
Financial Statements (collectively, the "Liabilities"). The Acquiring Fund will
assume only the Liabilities and will not, except as on 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 on determined as of the close of business on the Closing
Date (the "Selling Fund Shareholders") the Acquiring Fund Shares it receives on
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
on Fund Shares due those shareholders. All issued and outstanding Shares of the
Selling Fund ("Selling Fund Shares") will on simultaneously be canceled on the
books of the Selling Fund and all certificates relating to the Selling Fund
Shares, if any, will be marked "Cancelled." The Acquiring Fund will not issue
certificates representing the Acquiring Fund's Shares in connection with the on
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 on transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the Acquiring Fund's
current prospectus and on 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
the Provident on Trust ("Termination Date"). In addition, the Provident Trust
will as soon as practicable after the Termination Date take all other on 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 on 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 on 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 on referred to as the "Valuation Date" for purposes of
this Agreement), using the valuation procedures set out in the Selling Fund's on
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 on 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 on 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 on this Article II.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 The Closing Date for the Reorganization will be June 14, 2002, or such
other date agreed to in writing by the on Vanguard Trust and the Provident
Trust. All acts taking place at the Closing will be deemed to take place
simultaneously as of the on 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 on Vanguard Trust, 100 Vanguard Blvd., Malvern, PA 19355, or at such other
time and/or place agreed to by the Vanguard Trust and the on Provident Trust.
3.2 The Acquiring Fund will arrange for its custodian to 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 on Acquiring Fund prior to or on the Closing Date, and (b)
all necessary taxes, including all applicable federal and state stock on
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transfer stamps, if any, will have been paid, or provision for payment has been
made, in conjunction with the delivery of portfolio on 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 on 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 Provident 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 on to the Closing or provide evidence that the information has
been provided to the Acquiring Fund's transfer agent. The Vanguard on Trust, 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 the Provident Trust or provide evidence
satisfactory to the on Provident Trust that the Acquiring Fund Shares have been
credited to the Selling Fund's account on the books of the Acquiring Fund. on At
the Closing, each party to this Agreement will deliver to the other party such
bills of sale, checks, assignments, share on 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 Provident Trust, on behalf of the Selling Fund, represents and
warrants to the Vanguard Trust as follows:
(a) The Selling Fund is a series of the Provident Trust, a business
trust duly organized, validly existing, and in good standing under the laws of
the State of Delaware;
(b) The Provident Trust is a registered open-end management investment
company and its registration with the on Securities and Exchange Commission (the
"Commission") as an investment company under the 1940 Act is in full force and
on effect;
(c) The Provident Trust is not, and the execution, delivery, and
performance of this Agreement (subject to on approval of the Selling Fund
Shareholders) will not result, in a violation of any provision of its
Declaration of Trust or on any material agreement, indenture, instrument,
contract, lease or other undertaking to which the Provident Trust on behalf on
of itself or on behalf of the Selling Fund is a party or by which its property
is bound;
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(d) The Provident Trust will turn over all of the books and records
relating to the Selling Fund (including all on 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 Provident Trust has no contracts or other commitments (other
than this Agreement) with respect to the on Selling Fund that will be terminated
with liability to the Selling Fund prior to the Closing Date;
(f) Except as previously disclosed in writing to and accepted by the
Vanguard Trust, no litigation or on administrative proceeding or investigation
of or before any court or governmental body is presently pending or, to the
Provident Trust's knowledge threatened, against the Provident Trust in
connection with the Selling Fund or any of its properties or assets that, if
adversely determined, would materially and adversely affect the Selling Fund's
financial condition or the conduct of its business. The Provident 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 Provident Trust's ability to
consummate the transactions contemplated by this Agreement;
(g) The statements of assets and liabilities of the Provident Trust
relating to the Selling Fund for each annual period beginning with commencement
of the Selling Fund and ending on October 31, 2001 (the "Audited Statements of
Assets and Liabilities") have been audited by McGladrey & Pullen, LLP or
PricewaterhouseCoopers LLP, as applicable, each 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 October 31, 2001, 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 in writing to the
Vanguard Trust prior to the Closing Date. 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, 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 Provident Trust's knowledge, no
such tax return is currently under audit and no assessment has been asserted
with respect to such a return;
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(j) For each of its prior fiscal years of operation and for each
subsequent quarter end of the current fiscal year, the Provident 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 Provident Trust's transfer agent as
provided in paragraph 3.4 of this Agreement. The Provident 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 (other than by exchange from
other series of Provident Trust);
(l) At the Closing Date, (i) the Provident Trust, on behalf of the
Selling Fund, will have redeemed all Shares of the Master Fund held by the
Selling Fund and received in-kind a distribution of a pro rata portion of the
assets of the Master Fund in accordance with applicable law, (ii) the assets of
the Selling Fund will not be composed, in whole or in part, of Shares of the
Master Fund, and (iii) the Provident 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 Provident 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 Provident
Trust, enforceable against the Provident 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 and to general equity principles;
(n) The information to be furnished by the Provident 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 such statements were
made, not materially misleading; and
(p) The current prospectus and statement of additional information
filed with the Commission as part of the Provident Trust's registration
statement on Form N-1A, insofar as they relate to the Selling Fund (the
"Provident 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 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 Provident
Trust Registration Statement or necessary to make the statements therein, in
light of the circumstances under which they were made, not materially
misleading.
4.2 The Vanguard Trust, on behalf of the Acquiring Fund, represents and
warrants to the Provident Trust as follows:
(a) The Acquiring Fund is a series of the Vanguard Trust, 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 with the Commission 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 its property is bound;
(e) The current prospectus and statement of additional information
filed with the Commission as part of the Vanguard Trust's registration statement
on Form N-1A relating to the Acquiring Fund conform in all material respects to
the applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations thereunder and do not include any untrue statement of a material
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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.
(f) Except as previously disclosed in writing to and accepted by the
Provident 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 Acquiring Fund's financial
condition or the conduct of its business. The Vanguard Trust knows of no facts
that might form the basis for the institution of such proceedings and is not a
party to or subject to the provisions of any order, decree or judgment of any
court or governmental body that materially and adversely affects its business or
the business of the Acquiring Fund or the Vanguard Trust's ability to consummate
the transactions contemplated in this Agreement;
(g) The Acquiring Fund has had no material business operations, and
has no material assets or liabilities since [DATE], the date of its
organization;
(h) 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;
(i) 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;
(j) 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;
(k) The execution, delivery and performance of this Agreement has been
duly authorized by all necessary actions on the part of the Vanguard Trust's
Board of Trustees, and this Agreement will constitute 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 and to general equity principles;
(l) 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;
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(m) 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 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;
(n) 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
(o) 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 VANGUARD TRUST AND THE PROVIDENT TRUST
5.1 The Vanguard Trust will operate the business of the Acquiring Fund, and
the Provident 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 Provident 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 Provident 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 Provident 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 Provident Trust, on behalf of the Selling Fund, will assist the
Vanguard Trust in obtaining all information 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
Provident 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
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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, the Provident Trust will furnish the Vanguard
Trust, in such form as is reasonably satisfactory to the Vanguard Trust, 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 The Provident 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 after
the Closing Date, the Provident 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 Provident 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 Provident Trust.
5.9 As promptly as practicable, but in any case within the period required
by applicable law or regulation, the Provident 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 PROVIDENT TRUST
The obligations of the Provident 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
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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 Provident Trust a
certificate executed in its name, and on behalf of the Acquiring Fund, by its
Chief Executive Officer, President or Vice President and its Secretary,
Treasurer or Assistant Treasurer, in form and substance reasonably satisfactory
to the Provident 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 Provident Trust may reasonably request.
6.3 The Provident Trust will have received on the Closing Date a favorable
opinion from Morgan, Lewis & Bockius, LLP, counsel to the Vanguard Trust, dated
as of the Closing Date, in form and substance reasonably satisfactory to the
Provident Trust, and based upon customary certificates with respect to matters
of fact from the officers of the Vanguard 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 trust 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 Vanguard Trust'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 Provident 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
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(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 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 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;
(h) such counsel does not know of any legal, administrative or
governmental proceeding, 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 or that materially and adversely affect the Acquiring
Fund's business; 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.
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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 Provident Trust or the Selling Fund, contained in the Proxy
Statement or the Vanguard Trust Registration Statement, and that such opinion is
solely for the benefit of the Provident Trust and its trustees 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
trustees of the Acquiring Fund. The opinion also will include such other matters
incident to the transaction contemplated by this Agreement as the Provident
Trust 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.
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 Provident 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 Provident 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 Provident 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 bases (and, if
different from tax costs, book costs) of those securities by lot and the holding
periods of those securities as of the Closing Date, certified by the Treasurer
or Assistant Treasurer of the Provident Trust. Such list of tax cost bases and
holding periods shall reflect any allocations and adjustments which may arise
under the Code and/or Treasury Regulations as a result of the in-kind redemption
from the Master Fund to the Selling Fund (including, but not limited to, any
allocations and adjustments in accordance with Sections 732(b) and 732(c) of the
Code and any wash sale adjustments) and will be in such a form as to enable the
Vanguard Fund to accurately determine the tax cost bases for the securities
received from the Selling Fund on a lot basis without the need to consult any
additional schedules of allocation or adjustment.
7.3 The Provident 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 Chief Executive Officer, President or Vice President and its
Secretary, Treasurer or Assistant Treasurer, in form and substance reasonably
satisfactory to the Vanguard Trust and dated as of the Closing Date, to the
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effect that the representations and warranties of the Provident 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 Paul, Hastings, Janofsky & Walker LLP, counsel to the Provident
Trust, dated as of the Closing Date, in form and substance reasonably
satisfactory to the Vanguard Trust, and based upon customary certificates with
respect to matters of fact from the officers of the Provident Trust, covering
the following points:
(a) the Selling Fund is a separate series of the Provident Trust, a
business trust that is duly organized, validly existing and in good standing
under the laws of the State of Delaware and the Provident Trust has the trust
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 Provident Trust is registered as an investment company under
the 1940 Act and, to such counsel's knowledge, the Provident Trust's
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
the Provident 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 Provident Trust enforceable against the
Provident 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 Provident Trust's Declaration of Trust or in a material
violation of any provision of any agreement relating to the Selling Fund (known
to such counsel) to which the Provident 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 Provident 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 Provident
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) the descriptions in the Proxy Statement, insofar as they relate to
the Provident Trust or the Selling 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; and
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(g) such counsel does not know of any legal, administrative or
governmental proceeding, investigation, order, decree or judgment of any court
or governmental body, insofar as they relate to the Provident Trust, the Selling
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 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 the Provident Trust 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 upon the opinions
of officers and other representatives of the Provident Trust), 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 to make
the statements in the Proxy Statement regarding the Selling Fund not misleading
in the light of the circumstances under which they were made.
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, and that such opinion is solely for the benefit of the Vanguard Trust
and its trustees and officers. The opinion also will include such other matters
incident to the transaction contemplated by this Agreement as the Vanguard Trust
may reasonably request. 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 Provident Trust.
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 Trust will have received on the Closing Date a favorable
opinion of Paul, Hastings, Janofsky & Walker LLP, addressed to, and in form and
substance reasonably satisfactory to the Vanguard Trust substantially to the
effect that, provided the redemption in-kind of all Shares of the Master Fund by
the Selling Fund, as contemplated hereby, is carried out as described herein,
and based upon customary certificates with respect to matters of fact from the
officers of the Provident Trust, that for federal income tax purposes:
(a) the Selling Fund will recognize no gain or loss on the redemption
in-kind of all of its Shares of the Master Fund in accordance with Section 731
of the Code;
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(b) the basis of assets received by the Selling Fund on the redemption
in-kind of all of its Shares of the Master Fund will be the same basis as the
basis which the Selling Fund had in its Shares of the Master Fund immediately
prior to the redemption, less any cash distributed, and will be allocated to
such assets in accordance with Section 732(b) and Section 732(c) of the Code;
(c) the holding period of the assets received by the Selling Fund on
the redemption in-kind of its Shares of the Master Fund will include the period
during which the Master Fund held those Shares under Section 735(b) of the Code.
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
Provident Trust 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
Trust and the Provident Trust 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 the Provident Trust or the officers of the Provident Trust
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 those of the audited Financial Statements;
and
(d) on the basis of limited procedures agreed upon by the Vanguard
Trust and the Provident Trust 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 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
the Provident Trust having responsibility for financial and reporting matters
and the information is in agreement with these records, schedules or
computations made from those documents.
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7.7 The Provident Trust will have delivered to the Vanguard Trust,
pursuant to paragraph 4.1(g) of this Agreement, copies of Financial Statements
of the Selling Fund as of and for its most recently completed fiscal year.
7.8 The Vanguard Trust will have received from PricewaterhouseCoopers
LLP a letter addressed to the Vanguard Trust and dated as of the Valuation Date
stating that as of a date no more than three business days prior to the
Valuation Date, PricewaterhouseCoopers LLC performed limited procedures in
connection with the Provident Trust's most recent unaudited financial statements
relating to the Selling Fund (the "Unaudited Financial Statements") 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 the Provident Trust relating to the
Selling Fund.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
SELLING FUND
The obligations of the Vanguard Trust and the Provident Trust, respectively, to
complete the transactions provided for in this Agreement are subject to the
performance by the other party of such other party's obligations, and the
following conditions:
8.1 This Agreement and the transactions contemplated in this 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 Provident
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 Provident Trust to permit
consummation, in all material respects, of the transactions contemplated by this
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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 Provident Trust may for itself waive any
of the conditions in this paragraph 8.3.
8.4 The Vanguard Trust Registration Statement and the Registration
Statement will each have become effective under the 1933 Act and no stop orders
suspending the effectiveness of the Vanguard Trust Registration Statement or the
Registration Statement will have been issued and, to the best knowledge of the
Vanguard Trust or the Provident Trust, 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 Morgan, Lewis &
Bockius, LLP, addressed to, and in form and substance reasonably satisfactory to
the Provident 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 Provident 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
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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 Provident Trust may waive the conditions set out in this
paragraph 8.5.
ARTICLE IX
BROKERAGE FEES AND EXPENSES; OTHER AGREEMENTS
9.1 The Vanguard Trust represents and warrants to the Provident Trust, and
the Provident 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, Inc. ("The Vanguard Group") and Provident
Investment Counsel, Inc. 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 7, 2002,
to which each is a party; provided, however, that The Vanguard Group shall also
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 the Selling Fund or Provident
Investment Counsel, Inc. ("Provident"), as mutually agreed between such two
parties, shall bear the fees, costs, and expenses of PricewaterhouseCoopers LLP
in performing the limited procedures required under paragraph 7.8.
9.3 (a) Provident will indemnify and hold harmless the Vanguard Trust, the
Acquiring Fund, The Vanguard Group, Inc., their trustees, 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 Provident Trust's representations or warranties under this Agreement, or as
a result of any willful misconduct or negligence by the Provident Trust in the
performance (or failure to perform) of the Provident Trust's obligations under
this Agreement.
(b) Provident's agreement to indemnify a Vanguard Indemnified Party
pursuant to this paragraph 9.3 is expressly conditioned upon Provident's being
notified of any action or claim brought against any Vanguard Indemnified Party
within thirty (30) days after that party receives notice of the action or claim.
The failure of a Vanguard Indemnified Party to notify Provident will not relieve
Provident from any liability that Provident may have otherwise than on account
of this indemnification agreement.
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(c) In case any action or claim is brought against any Vanguard
Indemnified Party and that party timely notifies Provident of the commencement
of the action or claim, Provident 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.
Provident shall be entitled to select and engage counsel reasonably satisfactory
to the Vanguard Indemnified Party to handle and defend against any action or
claim. In the event Provident does not assume full control over the handling and
defense of any action or claim, the Vanguard Indemnified Party shall have the
right to handle, defend, and/or settle any such action or claim as it may deem
appropriate, at the cost and expense of Provident. Provident shall not enter
into the settlement of any action or claim on behalf of a Vanguard Indemnified
Party without the prior written consent of the Vanguard Indemnified Party.
9.4 (a) The Vanguard Group will indemnify and hold harmless the Provident
Trust, the Selling Fund, Provident Investment Counsel, Inc., their trustees,
directors, officers, employees and affiliates (each, a "Provident 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 Vanguard Trust's representations or warranties under
this Agreement, or as a result of any willful misconduct or negligence by the
Vanguard Trust in the performance (or failure to perform) of the Vanguard
Trust's obligations under this Agreement.
(b) Vanguard's agreement to indemnify a Provident Indemnified Party
pursuant to this paragraph 9.4 is expressly conditioned upon Vanguard's being
notified of any action or claim brought against any Provident Indemnified Party
within thirty (30) days after that party receives notice of the action or claim.
The failure of a Provident 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 Provident
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.
Vanguard shall be entitled to select and engage counsel reasonably satisfactory
to the Provident Indemnified Party to handle and defend against any action or
claim. In the event Vanguard does not assume full control over the handling and
defense of any action or claim, the Provident Indemnified Party shall have the
right to handle, defend, and/or settle any such action or claim as it may deem
appropriate, at the cost and expense of Vanguard. Vanguard shall not enter into
the settlement of any action or claim on behalf of a Provident Indemnified Party
without the prior written consent of the Provident Indemnified Party.
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ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 The Vanguard Trust and the Provident 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
with respect to the Reorganization.
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 the Provident Trust and the Vanguard
Trust; (ii) the Provident Trust, in the event the Vanguard Trust has, or the
Vanguard Trust in the event the Provident 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 Provident 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, neither the Vanguard Trust, nor
the Provident Trust, nor any series thereof other than the Selling Fund and the
Acquiring Fund, nor their respective trustees or officers, will 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 Provident 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.
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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
P.O. Box 2600
Valley Forge, PA 19482
Attention: Joel M. Dickson
Telephone: 610-669-5846
Facsimile: 610-503-5855
If to the Provident Trust, at:
Provident Investment Counsel
300 North Lake Avenue
Pasadena, California 91101-4106
Attention:
Telephone:
Facsimile:
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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 State of Delaware.
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.
* * * * *
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.
PIC INVESTMENT TRUST VANGUARD WHITEHALL FUNDS
- ----------------------------------- ------------------------------------
Signature Date Signature Date
- ----------------------------------- ------------------------------------
Print Name Title Print Name Title
PROVIDENT INVESTMENT COUNSEL, INC. THE VANGUARD GROUP (as to the
(as to the provisions of Paragraphs provisions of Paragraphs 9.2 and
9.2 and 9.5 only) 9.3 only)
- ----------------------------------- ------------------------------------
Signature Date Signature Date
- ----------------------------------- ------------------------------------
Print Name Title Print Name Title
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