AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
AMERICAN CENTURY PREMIUM RESERVES, INC.
AMERICAN CENTURY MUTUAL FUNDS, INC.
and
AMERICAN CENTURY INVESTMENT TRUST
TABLE OF CONTENTS
Preamble........................................................1
1. Transfer of Assets of Intermediate-Term Bond....................2
2. Transfer of Assets of Bond......................................3
3. Transfer of Assets of Premium Bond..............................4
4. Liquidating Distribution and Termination........................5
5. Valuation Time..................................................6
6. Certain Representations, Warranties and Agreements of ACMF......6
7. Certain Representations, Warranties and Agreements of ACMF......9
8. Certain Representations, Warranties and Agreements of ACPR......12
9. Certain Representations, Warranties and Agreements of ACIT......14
10. Shareholder Action on Behalf of Intermediate-Term Bond..........16
11. Shareholder Action on Behalf of Bond............................17
12. Shareholder Action on Behalf of Premium Bond....................17
13. Registration Statement and Proxy Solicitation Materials.........18
14. Effective Time of the Reorganization............................18
15. ACIT Conditions.................................................19
16. ACMF Conditions.................................................22
17. ACPR Conditions.................................................23
18. Tax Documents...................................................24
19. Further Assurances..............................................25
20. Termination of Representations and Warranties...................25
21. Termination of Agreement........................................25
22. Amendment and Waiver............................................26
23. Governing Law...................................................27
24. Successors and Assigns..........................................27
25. Beneficiaries...................................................27
26. ACIT Liability..................................................27
27. ACMF Liability..................................................27
28. ACPR Liability..................................................28
29. Notices.........................................................29
30. Expenses........................................................29
31. Entire Agreement................................................29
32. Counterparts....................................................29
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION made as of August 8, 2001 by and
between American Century Premium Reserves, Inc., a Maryland corporation
("ACPR"), American Century Mutual Funds, Inc., a Maryland corporation ("ACMF"),
and American Century Investment Trust, a Massachusetts business trust ("ACIT").
WHEREAS, the parties desire that substantially all of the assets and
liabilities of the Intermediate-Term Bond portfolio of ACMF ("Intermediate-Term
Bond") be transferred to, and be acquired and assumed by, the Diversified Bond
portfolio of ACIT ("Diversified Bond") in exchange for shares of Diversified
Bond which shall thereafter be distributed by ACMF to the holders of shares of
Intermediate-Term Bond, all as described in this Agreement (the
"Reorganization");
WHEREAS, the parties desire that substantially all of the assets and
liabilities of the Bond portfolio of ACMF ("Bond") be transferred to, and be
acquired and assumed by, the Diversified Bond portfolio of ACIT ("Diversified
Bond") in exchange for shares of Diversified Bond which shall thereafter be
distributed by ACMF to the holders of shares of Bond, all as described in this
Agreement (the "Reorganization");
WHEREAS, the parties desire that substantially all of the assets and
liabilities of the Premium Bond portfolio of ACPR ("Premium Bond") be
transferred to, and be acquired and assumed by, the Diversified Bond portfolio
of ACIT ("Diversified Bond") in exchange for shares of Diversified Bond which
shall thereafter be distributed by ACPR to the holders of shares of Premium
Bond, all as described in this Agreement (the "Reorganization");
WHEREAS, the parties intend that the transfer of assets, assumption of
liabilities and distribution of shares in Intermediate-Term Bond be treated as a
tax-free reorganization under Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code");
WHEREAS, the parties intend that the transfer of assets, assumption of
liabilities and distribution of shares in Bond be treated as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code");
WHEREAS, the parties intend that the transfer of assets, assumption of
liabilities and distribution of shares in Premium Bond be treated as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, the parties intend that in connection with the Reorganization,
Intermediate-Term Bond, Bond, and Premium Bond shall be terminated and
de-registered as described in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and subject to the terms and conditions hereof, and
intending to be legally bound hereby, ACPR, ACMF and ACIT agree as follows:
1. TRANSFER OF ASSETS OF INTERMEDIATE-TERM BOND.
1.1. At the Effective Time (as defined in Section 8), ACMF shall transfer
and convey to ACIT, on behalf of Diversified Bond, all property of every
description, and all interests, rights, privileges and powers of
Intermediate-Term Bond (such assets, the "Intermediate-Term Bond Assets").
Simultaneously, ACIT shall, on behalf of Diversified Bond, accept the
Intermediate-Term Bond Assets and assume all liabilities, whether accrued,
absolute, contingent or otherwise, of Intermediate-Term Bond reflected in the
calculation of Intermediate-Term Bond's net asset value (the "Intermediate-Term
Bond Liabilities"). As a result, at and after the Effective Time: (i) all assets
of Intermediate-Term Bond shall become and be the assets of Diversified Bond;
and (ii) all known liabilities of Intermediate-Term Bond reflected as such in
the calculation of Intermediate-Term Bond's net asset value shall attach to
Diversified Bond as aforesaid and may thenceforth be enforced against
Diversified Bond to the extent as if the same had been incurred by it. Without
limiting the generality of the foregoing, the Intermediate-Term Bond Assets
shall include all property and assets of any nature whatsoever, including
without limitation, all cash, cash equivalents, securities, other investments,
claims and receivables (including dividend and interest receivables) owned by
Intermediate-Term Bond, and any deferred or prepaid expenses shown as an asset
on Intermediate-Term Bond's books at the Effective Time, and all good will,
other intangible property and books and records belonging to Intermediate-Term
Bond. Recourse by any person for the Intermediate-Term Bond Liabilities assumed
by Diversified Bond shall, at and after the Effective Time, be limited to
Diversified Bond. 1.2. In exchange for the transfer of the Intermediate-Term
Bond Assets and the assumption of the Intermediate-Term Bond Liabilities, ACIT
shall simultaneously issue at the Effective Time to Intermediate-Term Bond a
number of full and fractional shares (to the third decimal place) of Diversified
Bond, all determined and adjusted as provided in this Agreement. The number of
shares of Diversified Bond so issued will have an aggregate net asset value
equal to the value of the Intermediate-Term Bond Assets, less the
Intermediate-Term Bond Liabilities, that are represented by shares of
Intermediate-Term Bond, the holders of which shall receive shares of Diversified
Bond, all determined and adjusted as provided in this Agreement. 1.3. The net
asset values of shares of Diversified Bond and of Intermediate-Term Bond shall
be determined as of the Valuation Time, as defined in Section 3. 1.4. The net
asset value of shares of Diversified Bond shall be computed in the manner set
forth in Diversified Bond's then-current prospectus under the Securities Act of
1933, as amended (the "1933 Act"). The net asset value of the Intermediate-Term
Bond Assets to be transferred by ACMF shall be computed by ACMF and shall be
subject to adjustment by the amount, if any, agreed to by ACIT and ACMF. In
determining the value of the securities transferred by Intermediate-Term Bond to
Diversified Bond, each security shall be priced in accordance with the policies
and procedures of ACIT as described in its then-current prospectus and statement
of additional information and adopted by ACIT's Board of Trustees, which are and
shall be consistent with the policies now in effect for ACMF. Price quotations
and the security characteristics relating to establishing such quotations shall
be determined by ACIT, provided that such determination shall be subject to the
approval of ACMF. 2. TRANSFER OF ASSETS OF BOND. 2.1. At the Effective Time (as
defined in Section 8), ACMF shall transfer and convey to ACIT, on behalf of
Diversified Bond, all property of every description, and all interests, rights,
privileges and powers Bond (such assets, the "Bond Assets"). Simultaneously,
ACIT shall, on behalf of Diversified Bond, accept the Bond Assets and assume all
liabilities, whether accrued, absolute, contingent or otherwise, of Bond
reflected in the calculation of Bond's net asset value (the "Bond Liabilities").
As a result, at and after the Effective Time: (i) all assets of Bond shall
become and be the assets of Diversified Bond; and (ii) all known liabilities of
Bond reflected as such in the calculation of Bond's net asset value shall attach
to Diversified Bond as aforesaid and may thenceforth be enforced against
Diversified Bond to the extent as if the same had been incurred by it. Without
limiting the generality of the foregoing, the Bond Assets shall include all
property and assets of any nature whatsoever, including without limitation, all
cash, cash equivalents, securities, other investments, claims and receivables
(including dividend and interest receivables) owned by Bond, and any deferred or
prepaid expenses shown as an asset on Bond's books at the Effective Time, and
all good will, other intangible property and books and records belonging to
Bond. Recourse by any person for the Bond Liabilities assumed by Diversified
Bond shall, at and after the Effective Time, be limited to Diversified Bond.
2.2. In exchange for the transfer of the Bond Assets and the assumption of the
Bond Liabilities, ACIT shall simultaneously issue at the Effective Time to Bond
a number of full and fractional shares (to the third decimal place) of
Diversified Bond, all determined and adjusted as provided in this Agreement. The
number of shares of Diversified Bond so issued will have an aggregate net asset
value equal to the value of the Bond Assets, less the Bond Liabilities, that are
represented by shares of Bond, the holders of which shall receive shares of
Diversified Bond, all determined and adjusted as provided in this Agreement.
2.3. The net asset values of shares of Diversified Bond and of Bond shall be
determined as of the Valuation Time, as defined in Section 5. 2.4. The net asset
value of shares of Diversified Bond shall be computed in the manner set forth in
Diversified Bond's then-current prospectus under the Securities Act of 1933, as
amended (the "1933 Act"). The net asset value of the Bond Assets to be
transferred by ACMF shall be computed by ACMF and shall be subject to adjustment
by the amount, if any, agreed to by ACIT and ACMF. In determining the value of
the securities transferred by Bond to Diversified Bond, each security shall be
priced in accordance with the policies and procedures of ACIT as described in
its then-current prospectus and statement of additional information and adopted
by ACIT's Board of Trustees, which are and shall be consistent with the policies
now in effect for ACMF. Price quotations and the security characteristics
relating to establishing such quotations shall be determined by ACIT, provided
that such determination shall be subject to the approval of ACMF. 3. TRANSFER OF
ASSETS OF PREMIUM BOND. 3.1. At the Effective Time (as defined in Section 8),
ACPR shall transfer and convey to ACIT, on behalf of Diversified Bond, all
property of every description, and all interests, rights, privileges and powers
Premium Bond (such assets, the "Premium Bond Assets"). Simultaneously, ACIT
shall, on behalf of Diversified Bond, accept the Premium Bond Assets and assume
all liabilities, whether accrued, absolute, contingent or otherwise, of Premium
Bond reflected in the calculation of Premium Bond's net asset value (the
"Premium Bond Liabilities"). As a result, at and after the Effective Time: (i)
all assets of Premium Bond shall become and be the assets of Diversified Bond;
and (ii) all known liabilities of Premium Bond reflected as such in the
calculation of Premium Bond's net asset value shall attach to Diversified Bond
as aforesaid and may thenceforth be enforced against Diversified Bond to the
extent as if the same had been incurred by it. Without limiting the generality
of the foregoing, the Premium Bond Assets shall include all property and assets
of any nature whatsoever, including without limitation, all cash, cash
equivalents, securities, other investments, claims and receivables (including
dividend and interest receivables) owned by Premium Bond, and any deferred or
prepaid expenses shown as an asset on Premium Bond's books at the Effective
Time, and all good will, other intangible property and books and records
belonging to Premium Bond. Recourse by any person for the Premium Bond
Liabilities assumed by Diversified Bond shall, at and after the Effective Time,
be limited to Diversified Bond. 3.2. In exchange for the transfer of the Premium
Bond Assets and the assumption of the Premium Bond Liabilities, ACIT shall
simultaneously issue at the Effective Time to Premium Bond a number of full and
fractional shares (to the third decimal place) of Diversified Bond, all
determined and adjusted as provided in this Agreement. The number of shares of
Diversified Bond so issued will have an aggregate net asset value equal to the
value of the Premium Bond Assets, less the Premium Bond Liabilities, that are
represented by shares of Premium Bond, the holders of which shall receive shares
of Diversified Bond, all determined and adjusted as provided in this Agreement.
3.3. The net asset values of shares of Diversified Bond and of Premium Bond
shall be determined as of the Valuation Time, as defined in Section 5. 3.4. The
net asset value of shares of Diversified Bond shall be computed in the manner
set forth in Diversified Bond's then-current prospectus under the Securities Act
of 1933, as amended (the "1933 Act"). The net asset value of the Premium Bond
Assets to be transferred by ACPR shall be computed by ACPR and shall be subject
to adjustment by the amount, if any, agreed to by ACIT and ACPR. In determining
the value of the securities transferred by Premium Bond to Diversified Bond,
each security shall be priced in accordance with the policies and procedures of
ACIT as described in its then-current prospectus and statement of additional
information and adopted by ACIT's Board of Trustees, which are and shall be
consistent with the policies now in effect for ACPR. Price quotations and the
security characteristics relating to establishing such quotations shall be
determined by ACIT, provided that such determination shall be subject to the
approval of ACPR. 4. LIQUIDATING DISTRIBUTION AND TERMINATION. 4.1. Immediately
after the Effective Time, Intermediate-Term Bond shall distribute in the
complete liquidation pro rata to the record holders of its shares at the
Effective Time the shares of Diversified Bond to be received by the record
holders of Intermediate-Term Bond. In accordance with instructions it receives
from ACMF, ACIT shall record on its books the ownership of shares of Diversified
Bond by the record holders of shares of Intermediate-Term Bond. All of the
issued and outstanding shares of Intermediate-Term Bond shall be redeemed and
canceled on the books of ACMF at the Effective Time and shall thereafter
represent only the right to receive the shares of Diversified Bond, and
Intermediate-Term Bond's transfer books shall be closed permanently. As soon as
practicable after the Effective Time, ACMF shall take all steps as shall be
necessary and proper to effect the dissolution of Intermediate-Term Bond under
federal and state law. After the Effective Time, ACMF shall not conduct any
business with respect to Intermediate-Term Bond except in connection with
Intermediate-Term Bond's liquidation and dissolution. 4.2. Immediately after the
Effective Time, Bond shall distribute in the complete liquidation pro rata to
the record holders of its shares at the Effective Time the shares of Diversified
Bond to be received by the record holders of Bond. In accordance with
instructions it receives from ACMF, ACIT shall record on its books the ownership
of shares of Diversified Bond by the record holders of shares of Bond. All of
the issued and outstanding shares of Bond shall be redeemed and canceled on the
books of ACMF at the Effective Time and shall thereafter represent only the
right to receive the shares of Diversified Bond, and Bond's transfer books shall
be closed permanently. As soon as practicable after the Effective Time, ACMF
shall take all steps as shall be necessary and proper to effect the dissolution
of Bond under federal and state law. After the Effective Time, ACMF shall not
conduct any business with respect to Bond except in connection with Bond's
liquidation and dissolution. 4.3. Immediately after the Effective Time, Premium
Bond shall distribute in the complete liquidation pro rata to the record holders
of its shares at the Effective Time the shares of Diversified Bond to be
received by the record holders of Premium Bond. In accordance with instructions
it receives from ACPR, ACIT shall record on its books the ownership of shares of
Diversified Bond by the record holders of shares of Premium Bond. All of the
issued and outstanding shares of Premium Bond shall be redeemed and canceled on
the books of ACPR at the Effective Time and shall thereafter represent only the
right to receive the shares of Diversified Bond, and Premium Bond's transfer
books shall be closed permanently. As soon as practicable after the Effective
Time, ACPR shall take all steps as shall be necessary and proper to effect the
dissolution of Premium Bond under federal and state law. After the Effective
Time, ACPR shall not conduct any business with respect to Premium Bond except in
connection with Premium Bond's liquidation and dissolution. 5. VALUATION TIME.
Subject to Section 1.4, 2.4 and 3.4 hereof, the Valuation Time for the
Reorganization shall be on such date as may be agreed by the duly authorized
officers of both parties hereto. 6. CERTAIN REPRESENTATIONS, WARRANTIES AND
AGREEMENTS OF ACMF. ACMF, on behalf of itself and Intermediate-Term Bond,
represents and warrants to, and agrees with, ACIT as follows: 6.1. ACMF is a
Maryland corporation duly created pursuant to its Articles of Incorporation for
the purpose of acting as a management investment company under the 1940 Act and
is validly existing under the laws of, and duly authorized to transact business
in, the State of Maryland. Intermediate-Term Bond is registered with the
Securities and Exchange Commission (the "SEC") as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and such registration is in full force and effect. 6.2. ACMF has
power to own all of its properties and assets and, subject to the approval of
shareholders referred to herein, to carry out and consummate the transactions
contemplated hereby, and has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to consummate
the transactions contemplated by this Agreement. 6.3. This Agreement has been
duly authorized, executed and delivered by ACMF, and represents ACMF's valid and
binding contract, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, arrangement, moratorium,
and other similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. The execution and
delivery of this Agreement does not and will not, and the consummation of the
transactions contemplated by this Agreement will not, violate ACMF's Articles of
Incorporation, By-laws, or any agreement or arrangement to which it is a party
or by which it is bound. 6.4. Intermediate-Term Bond has elected to qualify and
has qualified as a "regulated investment company" under Subtitle A, Chapter 1,
Subchapter M, Part I of the Code, as of and since its first taxable year; has
been a regulated investment company at all times since the end of its first
taxable year when it so qualified; and qualifies and shall continue to qualify
as a regulated investment company until the Effective Time. 6.5. All federal,
state, local and foreign income, profits, franchise, sales, withholding,
customs, transfer and other taxes, including interest, additions to tax and
penalties (collectively, "Taxes") relating to the Intermediate-Term Bond Assets
or properly shown to be due on any return filed by Intermediate-Term Bond with
respect to taxable periods ending on or prior to, and the portion of any interim
period up to, the date hereof have been fully and timely paid or provided for;
and there are no levies, liens, or other encumbrances relating to Taxes
existing, threatened or pending with respect to the Intermediate-Term Bond
Assets. 6.6. The financial statements of Intermediate-Term Bond for the fiscal
year ended October 31, 2000, audited by Deloitte & Touche LLP, independent
auditors, copies of which have been previously furnished to ACIT, present fairly
the financial position of Intermediate-Term Bond as of October 31, 2000 and the
results of its operations for the year then ending, in conformity with generally
accepted accounting principles. 6.7. Prior to the Valuation Time,
Intermediate-Term Bond shall have declared a dividend or dividends, with a
record date and ex-dividend date prior to such Valuation Time, which, together
with all previous dividends, shall have the effect of distributing to its
shareholders all of its investment company taxable income, if any, for the
taxable periods or years ended on or before Intermediate-Term Bond's most recent
fiscal year end, and for the period from said date to and including the
Effective Time (computed without regard to any deduction for dividends paid),
and all of its net capital gain, if any, realized in taxable periods or years
ended on or before Intermediate-Term Bond's fiscal year end and for the period
from said date to and including the Effective Time. Such dividends will be paid
to shareholders of Intermediate-Term Bond prior to the Effective Date. 6.8. At
both the Valuation Time and the Effective Time, there shall be no known
liabilities of Intermediate-Term Bond, whether accrued, absolute, contingent or
otherwise, not reflected in the net asset value per share of its outstanding
shares. 6.9. There are no legal, administrative or other proceedings pending or,
to ACMF's knowledge threatened, against ACMF or Intermediate-Term Bond which
could result in liability on the part of Intermediate-Term Bond. 6.10. Subject
to the approval of shareholders, at both the Valuation Time and the Effective
Time, ACMF shall have full right, power and authority to assign, transfer and
deliver the Intermediate-Term Bond Assets and, upon delivery and payment for the
Intermediate-Term Bond Assets as contemplated herein, Diversified Bond shall
acquire good and marketable title thereto, free and clear of all liens and
encumbrances, and subject to no restrictions on the ownership or transfer
thereof (except as imposed by federal or state securities laws). 6.11. No
consent, approval, authorization or order of any court or governmental authority
is required for the consummation by ACMF of the transactions contemplated by
this Agreement, except such as may be required under the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, the
rules and regulations under those Acts, and state securities laws. 6.12. Insofar
as the following relate to ACMF, the registration statement filed by ACIT on
Form N-14 relating to the shares of Diversified Bond that will be registered
with the SEC pursuant to this Agreement, which, without limitation, shall
include a proxy statement of ACMF and the prospectus of ACIT with respect to the
transactions contemplated by this Agreement, and any supplement or amendment
thereto or to the documents contained or incorporated therein by reference (the
"N-14 Registration Statement"), on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein and at
the Effective Time: (i) shall comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act, the rules and
regulations thereunder, and state securities laws, and (ii) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the representations and warranties in this
subsection shall apply only to statements in or omissions from the N-14
Registration Statement made in reliance upon and in conformity with information
furnished by ACMF for use in the N-14 Registration Statement. 6.13. All of the
issued and outstanding shares of Intermediate-Term Bond have been duly and
validly issued, are fully paid and non-assessable, and were offered for sale and
sold in conformity with all applicable federal and state securities laws, and no
shareholder of Intermediate-Term Bond has any preemptive right of subscription
or purchase in respect of such shares. 7. CERTAIN REPRESENTATIONS, WARRANTIES
AND AGREEMENTS OF ACMF. ACMF, on behalf of itself and Bond, represents and
warrants to, and agrees with, ACIT as follows: 7.1. ACMF is a Maryland
corporation duly created pursuant to its Articles of Incorporation for the
purpose of acting as a management investment company under the 1940 Act and is
validly existing under the laws of, and duly authorized to transact business in,
the State of Maryland. Bond is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and such
registration is in full force and effect. 7.2. ACMF has power to own all of its
properties and assets and, subject to the approval of shareholders referred to
herein, to carry out and consummate the transactions contemplated hereby, and
has all necessary federal, state and local authorizations to carry on its
business as now being conducted and to consummate the transactions contemplated
by this Agreement. 7.3. This Agreement has been duly authorized, executed and
delivered by ACMF, and represents ACMF's valid and binding contract, enforceable
in accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, reorganization, arrangement, moratorium, and other similar laws of
general applicability relating to or affecting creditors' rights and to general
principles of equity. The execution and delivery of this Agreement does not and
will not, and the consummation of the transactions contemplated by this
Agreement will not, violate ACMF's Articles of Incorporation, By-laws, or any
agreement or arrangement to which it is a party or by which it is bound. 7.4.
Bond has elected to qualify and has qualified as a "regulated investment
company" under Subtitle A, Chapter 1, Subchapter M, Part I of the Code, as of
and since its first taxable year; has been a regulated investment company at all
times since the end of its first taxable year when it so qualified; and
qualifies and shall continue to qualify as a regulated investment company until
the Effective Time. 7.5. All federal, state, local and foreign income, profits,
franchise, sales, withholding, customs, transfer and other taxes, including
interest, additions to tax and penalties (collectively, "Taxes") relating to the
Bond Assets or properly shown to be due on any return filed by Bond with respect
to taxable periods ending on or prior to, and the portion of any interim period
up to, the date hereof have been fully and timely paid or provided for; and
there are no levies, liens, or other encumbrances relating to Taxes existing,
threatened or pending with respect to the Bond Assets. 7.6. The financial
statements of Bond for the fiscal year ended October 31, 2000, audited by
Deloitte & Touche LLP, independent auditors, copies of which have been
previously furnished to ACIT, present fairly the financial position of Bond as
of October 31, 2000 and the results of its operations for the year then ending,
in conformity with generally accepted accounting principles. 7.7. Prior to the
Valuation Time, Bond shall have declared a dividend or dividends, with a record
date and ex-dividend date prior to such Valuation Time, which, together with all
previous dividends, shall have the effect of distributing to its shareholders
all of its investment company taxable income, if any, for the taxable periods or
years ended on or before Bond's most recent fiscal year end, and for the period
from said date to and including the Effective Time (computed without regard to
any deduction for dividends paid), and all of its net capital gain, if any,
realized in taxable periods or years ended on or before Bond's fiscal year end
and for the period from said date to and including the Effective Time. Such
dividends will be paid to shareholders of Bond prior to the Effective Date. 7.8.
At both the Valuation Time and the Effective Time, there shall be no known
liabilities of Bond, whether accrued, absolute, contingent or otherwise, not
reflected in the net asset value per share of its outstanding shares. 7.9. There
are no legal, administrative or other proceedings pending or, to ACMF's
knowledge threatened, against ACMF or Bond which could result in liability on
the part of Bond. 7.10. Subject to the approval of shareholders, at both the
Valuation Time and the Effective Time, ACMF shall have full right, power and
authority to assign, transfer and deliver the Bond Assets and, upon delivery and
payment for the Bond Assets as contemplated herein, Diversified Bond shall
acquire good and marketable title thereto, free and clear of all liens and
encumbrances, and subject to no restrictions on the ownership or transfer
thereof (except as imposed by federal or state securities laws). 7.11. No
consent, approval, authorization or order of any court or governmental authority
is required for the consummation by ACMF of the transactions contemplated by
this Agreement, except such as may be required under the 1933 Act, the
Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940 Act, the
rules and regulations under those Acts, and state securities laws. 7.12. Insofar
as the following relate to ACMF, the registration statement filed by ACIT on
Form N-14 relating to the shares of Diversified Bond that will be registered
with the SEC pursuant to this Agreement, which, without limitation, shall
include a proxy statement of ACMF and the prospectus of ACIT with respect to the
transactions contemplated by this Agreement, and any supplement or amendment
thereto or to the documents contained or incorporated therein by reference (the
"N-14 Registration Statement"), on the effective date of the N-14 Registration
Statement, at the time of any shareholders' meeting referred to herein and at
the Effective Time: (i) shall comply in all material respects with the
provisions of the 1933 Act, the 1934 Act and the 1940 Act, the rules and
regulations thereunder, and state securities laws, and (ii) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the representations and warranties in this
subsection shall apply only to statements in or omissions from the N-14
Registration Statement made in reliance upon and in conformity with information
furnished by ACMF for use in the N-14 Registration Statement. 7.13. All of the
issued and outstanding shares of Bond have been duly and validly issued, are
fully paid and non-assessable, and were offered for sale and sold in conformity
with all applicable federal and state securities laws, and no shareholder of
Bond has any preemptive right of subscription or purchase in respect of such
shares. 8. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ACPR. ACPR, on
behalf of itself and Premium Bond, represents and warrants to, and agrees with,
ACIT as follows: 8.1. ACPR is a Maryland corporation duly created pursuant to
its Articles of Incorporation for the purpose of acting as a management
investment company under the 1940 Act and is validly existing under the laws of,
and duly authorized to transact business in, the State of Maryland. Premium Bond
is registered with the Securities and Exchange Commission (the "SEC") as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the "1940 Act"), and such registration is in full force and effect.
8.2. ACPR has power to own all of its properties and assets and, subject to the
approval of shareholders referred to herein, to carry out and consummate the
transactions contemplated hereby, and has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to consummate
the transactions contemplated by this Agreement. 8.3. This Agreement has been
duly authorized, executed and delivered by ACPR, and represents ACPR's valid and
binding contract, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, arrangement, moratorium,
and other similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. The execution and
delivery of this Agreement does not and will not, and the consummation of the
transactions contemplated by this Agreement will not, violate ACPR's Articles of
Incorporation, By-laws, or any agreement or arrangement to which it is a party
or by which it is bound. 8.4. Premium Bond has elected to qualify and has
qualified as a "regulated investment company" under Subtitle A, Chapter 1,
Subchapter M, Part I of the Code, as of and since its first taxable year; has
been a regulated investment company at all times since the end of its first
taxable year when it so qualified; and qualifies and shall continue to qualify
as a regulated investment company until the Effective Time. 8.5. All federal,
state, local and foreign income, profits, franchise, sales, withholding,
customs, transfer and other taxes, including interest, additions to tax and
penalties (collectively, "Taxes") relating to the Premium Bond Assets or
properly shown to be due on any return filed by Premium Bond with respect to
taxable periods ending on or prior to, and the portion of any interim period up
to, the date hereof have been fully and timely paid or provided for; and there
are no levies, liens, or other encumbrances relating to Taxes existing,
threatened or pending with respect to the Premium Bond Assets. 8.6. The
financial statements of Premium Bond for the fiscal year ended March 31, 2001,
audited by Deloitte & Touche LLP, independent auditors, copies of which have
been previously furnished to ACIT, present fairly the financial position of
Premium Bond as of March 31, 2001 and the results of its operations for the year
then ending, in conformity with generally accepted accounting principles. 8.7.
Prior to the Valuation Time, Premium Bond shall have declared a dividend or
dividends, with a record date and ex-dividend date prior to such Valuation Time,
which, together with all previous dividends, shall have the effect of
distributing to its shareholders all of its investment company taxable income,
if any, for the taxable periods or years ended on or before Premium Bond's most
recent fiscal year end, and for the period from said date to and including the
Effective Time (computed without regard to any deduction for dividends paid),
and all of its net capital gain, if any, realized in taxable periods or years
ended on or before Premium Bond's fiscal year end and for the period from said
date to and including the Effective Time. Such dividends will be paid to
shareholders of Premium Bond prior to the Effective Date. 8.8. At both the
Valuation Time and the Effective Time, there shall be no known liabilities of
Premium Bond, whether accrued, absolute, contingent or otherwise, not reflected
in the net asset value per share of its outstanding shares. 8.9. There are no
legal, administrative or other proceedings pending or, to ACPR's knowledge
threatened, against ACPR or Premium Bond which could result in liability on the
part of Premium Bond. 8.10. Subject to the approval of shareholders, at both the
Valuation Time and the Effective Time, ACPR shall have full right, power and
authority to assign, transfer and deliver the Premium Bond Assets and, upon
delivery and payment for the Premium Bond Assets as contemplated herein,
Diversified Bond shall acquire good and marketable title thereto, free and clear
of all liens and encumbrances, and subject to no restrictions on the ownership
or transfer thereof (except as imposed by federal or state securities laws).
8.11. No consent, approval, authorization or order of any court or governmental
authority is required for the consummation by ACPR of the transactions
contemplated by this Agreement, except such as may be required under the 1933
Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"), the 1940
Act, the rules and regulations under those Acts, and state securities laws.
8.12. Insofar as the following relate to ACPR, the registration statement filed
by ACIT on Form N-14 relating to the shares of Diversified Bond that will be
registered with the SEC pursuant to this Agreement, which, without limitation,
shall include a proxy statement of ACPR and the prospectus of ACIT with respect
to the transactions contemplated by this Agreement, and any supplement or
amendment thereto or to the documents contained or incorporated therein by
reference (the "N-14 Registration Statement"), on the effective date of the N-14
Registration Statement, at the time of any shareholders' meeting referred to
herein and at the Effective Time: (i) shall comply in all material respects with
the provisions of the 1933 Act, the 1934 Act and the 1940 Act, the rules and
regulations thereunder, and state securities laws, and (ii) shall not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the representations and warranties in this
subsection shall apply only to statements in or omissions from the N-14
Registration Statement made in reliance upon and in conformity with information
furnished by ACPR for use in the N-14 Registration Statement. 8.13. All of the
issued and outstanding shares of Premium Bond have been duly and validly issued,
are fully paid and non-assessable, and were offered for sale and sold in
conformity with all applicable federal and state securities laws, and no
shareholder of Premium Bond has any preemptive right of subscription or purchase
in respect of such shares. 9. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS
OF ACIT. ACIT, on behalf of itself and Diversified Bond, represents and warrants
to, and agrees with, ACMF and ACPR as follows: 9.1. ACIT is a Massachusetts
business trust duly created pursuant to a Declaration of Trust for the purpose
of acting as a management investment company under the 1940 Act and is validly
existing under the laws of, and duly authorized to transact business in, the
Commonwealth of Massachusetts, Diversified Bond is registered with the SEC as an
open-end management investment company under the 1940 Act and such registration
is in full force and effect. 9.2. ACIT has the power to own all of its
properties and assets and to carry out and consummate the transactions
contemplated herein, and has all necessary federal, state and local
authorizations to carry on its business as now being conducted and to consummate
the transactions contemplated by this Agreement. 9.3. This Agreement has been
duly authorized, executed and delivered by ACIT, and represents ACIT's valid and
binding contract, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, arrangement, moratorium,
and other similar laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. The execution and
delivery of this Agreement did not, and the consummation of the transactions
contemplated by this Agreement will not, violate ACIT's Declaration of Trust or
By-laws or any agreement or arrangement to which it is a party or by which it is
bound. 9.4. Diversified Bond intends to qualify as a "regulated investment
company" under Subtitle A, Chapter 1, Subchapter M, Part I of the Code. 9.5. As
a new fund, Diversified Bond does not have audited financial statements. 9.6. At
both the Valuation Time and the Effective Time, there shall be no known
liabilities of Diversified Bond whether accrued, absolute, contingent or
otherwise, not reflected in the net asset value per share of its shares to be
issued pursuant to this Agreement. 9.7. There are no legal, administrative or
other proceedings pending or, to its knowledge, threatened against ACIT or
Diversified Bond that could result in liability on the part of ACIT or
Diversified Bond. 9.8. No consent, approval, authorization or order of any court
or governmental authority is required for the consummation by ACIT of the
transactions contemplated by this Agreement, except such as may be required
under the 1933 Act, the 1934 Act, the 1940 Act, the rules and regulations under
those Acts, and state securities laws. 9.9. Insofar as the following relate to
ACIT, the N-14 Registration Statement on its effective date, at the time of any
shareholders' meetings referred to herein and at the Effective Time: (i) shall
comply in all material respects with the provisions of the 1933 Act, the 1934
Act and the 1940 Act, the rules and regulations thereunder, and state securities
laws, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the representations
and warranties in this subsection shall apply only to statements in or omissions
from the N-14 Registration Statement made in reliance upon and in conformity
with information furnished by ACIT for use in the N-14 Registration Statement.
9.10. The shares of Diversified Bond to be issued and delivered to
Intermediate-Term Bond for the account of record holders of shares of
Intermediate-Term Bond pursuant to the terms hereof shall have been duly
authorized as of the Effective Time and, when so issued and delivered, shall be
registered under the 1933 Act, duly and validly issued, fully paid and
non-assessable, and no shareholder of ACIT shall have any preemptive right of
subscription or purchase in respect thereto. 9.11. The shares of Diversified
Bond to be issued and delivered to Bond for the account of record holders of
shares of Bond pursuant to the terms hereof shall have been duly authorized as
of the Effective Time and, when so issued and delivered, shall be registered
under the 1933 Act, duly and validly issued, fully paid and non-assessable, and
no shareholder of ACIT shall have any preemptive right of subscription or
purchase in respect thereto. 9.12. The shares of Diversified Bond to be issued
and delivered to Premium Bond for the account of record holders of shares of
Premium Bond pursuant to the terms hereof shall have been duly authorized as of
the Effective Time and, when so issued and delivered, shall be registered under
the 1933 Act, duly and validly issued, fully paid and non-assessable, and no
shareholder of ACIT shall have any preemptive right of subscription or purchase
in respect thereto. 10. SHAREHOLDER ACTION ON BEHALF OF INTERMEDIATE-TERM BOND.
10.1. As soon as practicable after the effective date of the N-14 Registration
Statement, but in any event prior to the Effective Time and as a condition to
the Reorganization, the Board of Directors of ACMF shall call, and ACMF shall
hold, a meeting of the shareholders of Intermediate-Term Bond for the purpose of
considering and voting upon: 10.1.1. Approval of this Agreement and the
transactions contemplated hereby, including, without limitation: 10.1.1.1. The
transfer of the Intermediate-Term Bond Assets to Diversified Bond and the
assumption by Diversified Bond of the Intermediate-Term Bond Liabilities, in
exchange for shares of Diversified Bond, as described in this Agreement; and
10.1.1.2. The liquidation of Intermediate-Term Bond through the distribution to
its record holders of shares of the shares of Diversified Bond as described in
this Agreement; and 10.1.2. Such other matters as may be determined by the Board
of Directors or authorized officers of the parties. 10.2. Approval of this
Reorganization Agreement by the shareholders of Intermediate-Term Bond shall
constitute the waiver of the application of any fundamental policy of
Intermediate-Term Bond that might be deemed to prevent them from taking the
actions necessary to effectuate the Reorganization as described, and such
policies, if any, shall be deemed to have been amended accordingly. 11.
SHAREHOLDER ACTION ON BEHALF OF BOND. 11.1. As soon as practicable after the
effective date of the N-14 Registration Statement, but in any event prior to the
Effective Time and as a condition to the Reorganization, the Board of Directors
of ACMF shall call, and ACMF shall hold, a meeting of the shareholders of Bond
for the purpose of considering and voting upon: 11.1.1. Approval of this
Agreement and the transactions contemplated hereby, including, without
limitation: 11.1.1.1. The transfer of the Bond Assets to Diversified Bond and
the assumption by Diversified Bond of Bond Liabilities, in exchange for shares
of Diversified Bond, as described in this Agreement; and 11.1.1.2. The
liquidation of Bond through the distribution to its record holders of shares of
the shares of Diversified Bond as described in this Agreement; and 11.1.2. Such
other matters as may be determined by the Board of Directors or authorized
officers of the parties. 11.2. Approval of this Reorganization Agreement by the
shareholders of Bond shall constitute the waiver of the application of any
fundamental policy of Bond that might be deemed to prevent them from taking the
actions necessary to effectuate the Reorganization as described, and such
policies, if any, shall be deemed to have been amended accordingly. 12.
SHAREHOLDER ACTION ON BEHALF OF PREMIUM BOND. 12.1. As soon as practicable after
the effective date of the N-14 Registration Statement, but in any event prior to
the Effective Time and as a condition to the Reorganization, the Board of
Directors of ACPR shall call, and ACPR shall hold, a meeting of the shareholders
of Premium Bond for the purpose of considering and voting upon: 12.1.1. Approval
of this Agreement and the transactions contemplated hereby, including, without
limitation: 12.1.1.1. The transfer of the Premium Bond Assets to Diversified
Bond and the assumption by Diversified Bond of Premium Bond Liabilities, in
exchange for shares of Diversified Bond, as described in this Agreement; and
12.1.1.2. The liquidation of Premium Bond through the distribution to its record
holders of shares of the shares of Diversified Bond as described in this
Agreement; and 12.1.2. Such other matters as may be determined by the Board of
Directors or authorized officers of the parties. 12.2. Approval of this
Reorganization Agreement by the shareholders of Premium Bond shall constitute
the waiver of the application of any fundamental policy of Premium Bond that
might be deemed to prevent them from taking the actions necessary to effectuate
the Reorganization as described, and such policies, if any, shall be deemed to
have been amended accordingly. 13. REGISTRATION STATEMENT AND PROXY SOLICITATION
MATERIALS. The N-14 Registration Statement under the 1933 Act, including the
combined prospectus/proxy statement contained therein under the 1934 Act and
1940 Act proxy rules, shall be filed with the SEC as promptly as practicable,
ACMF, ACPR, and ACIT have cooperated and shall continue to cooperate with each
other, and have furnished and shall continue to furnish each other with the
information relating to themselves that is required by the 1933 Act, the 1934
Act, the 1940 Act, the rules and regulations under each of those Acts and state
securities laws, to be included in the N-14 Registration Statement. 14.
EFFECTIVE TIME OF THE REORGANIZATION. 14.1. Delivery of the Intermediate-Term
Bond Assets and the shares of Diversified Bond to be issued pursuant to Section
1 and the liquidation of Intermediate-Term Bond pursuant to Section 4 shall
occur at the opening of business on the next business day following the
Valuation Time, or on such other date, and at such place and time, as may be
determined by the President or any Vice President of each party hereto. The date
and time at which such actions are taken are referred to herein as the
"Effective Time." To the extent any of the Intermediate-Term Bond Assets are,
for any reason, not transferred at the Effective Time, ACMF shall cause such
Intermediate-Term Bond Assets to be transferred in accordance with this
Agreement at the earliest practicable date thereafter. 14.2. Delivery of the
Bond Assets and the shares of Diversified Bond to be issued pursuant to Section
2 and the liquidation of Bond pursuant to Section 4 shall occur at the opening
of business on the next business day following the Valuation Time, or on such
other date, and at such place and time, as may be determined by the President or
any Vice President of each party hereto. The date and time at which such actions
are taken are referred to herein as the "Effective Time." To the extent any of
the Bond Assets are, for any reason, not transferred at the Effective Time, ACMF
shall cause such Bond Assets to be transferred in accordance with this Agreement
at the earliest practicable date thereafter. 14.3. Delivery of the Premium Bond
Assets and the shares of Diversified Bond to be issued pursuant to Section 3 and
the liquidation of Premium Bond pursuant to Section 4 shall occur at the opening
of business on the next business day following the Valuation Time, or on such
other date, and at such place and time, as may be determined by the President or
any Vice President of each party hereto. The date and time at which such actions
are taken are referred to herein as the "Effective Time." To the extent any of
the Premium Bond Assets are, for any reason, not transferred at the Effective
Time, ACPR shall cause such Premium Bond Assets to be transferred in accordance
with this Agreement at the earliest practicable date thereafter. 15. ACIT
CONDITIONS. The obligations of ACIT hereunder with respect to Diversified Bond
shall be subject to the following conditions precedent: 15.1. This Agreement and
the transactions contemplated by this Agreement shall have been approved by the
shareholders of Intermediate-Term Bond, the shareholders of Bond, and the
shareholders of Premium Bond in the manner required by law. 15.2. ACMF shall
have duly executed and delivered to ACIT such bills of sale, assignments,
certificates and other instruments of transfer ("Transfer Documents") as may be
necessary or desirable to transfer all right, title and interest of ACMF and
Intermediate-Term Bond in and to the Intermediate-Term Bond Assets. The
Intermediate-Term Bond Assets shall be accompanied by all necessary state stock
transfer stamps or cash for the appropriate purchase price therefor. 15.3. ACMF
shall have duly executed and delivered to ACIT such bills of sale, assignments,
certificates and other instruments of transfer ("Transfer Documents") as may be
necessary or desirable to transfer all right, title and interest of ACMF and
Bond in and to the Bond Assets. The Bond Assets shall be accompanied by all
necessary state stock transfer stamps or cash for the appropriate purchase price
therefor. 15.4. ACPR shall have duly executed and delivered to ACIT such bills
of sale, assignments, certificates and other instruments of transfer ("Transfer
Documents") as may be necessary or desirable to transfer all right, title and
interest of ACPR and Premium Bond in and to the Premium Bond Assets. The Premium
Bond Assets shall be accompanied by all necessary state stock transfer stamps or
cash for the appropriate purchase price therefor. 15.5. All representations and
warranties made in this Agreement shall be true and correct in all material
respects as if made at and as of the Valuation Time and the Effective Time. As
of the Valuation Time and the Effective Time, there shall have been no material
adverse change in the financial position of Intermediate-Term Bond or Bond since
October 31, 2000, or of Premium Bond since March 31, 2001, other than those
changes incurred in the ordinary course of business as an investment company. No
action, suit or other proceeding shall 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 herein. 15.6. ACIT shall have received a tax opinion acceptable to
ACPR and ACMF, addressed to ACIT, ACPR and ACMF in a form reasonably
satisfactory to them and dated the Effective Time, substantially to the effect
that for federal income tax purposes: (i) the transfer of the Intermediate-Term
Bond Assets hereunder, and the assumption by Diversified Bond of the
Intermediate-Term Bond Liabilities, in exchange for shares of Diversified Bond,
and the distribution of said shares to the shareholders of Intermediate-Term
Bond, as provided in this Agreement, will constitute a reorganization within the
meaning of Section 368 of the Code, and Intermediate-Term Bond and Diversified
Bond will each be considered "a party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) the transfer of the Bond Assets hereunder, and
the assumption by Diversified Bond of the Bond Liabilities, in exchange for
shares of Diversified Bond, and the distribution of said shares to the
shareholders of Bond, as provided in this Agreement, will constitute a
reorganization within the meaning of Section 368 of the Code, and Bond and
Diversified Bond will each be considered "a party to a reorganization" within
the meaning of Section 368(b) of the Code; (iii) the transfer of the Premium
Bond Assets hereunder, and the assumption by Diversified Bond of the Premium
Bond Liabilities, in exchange for shares of Diversified Bond, and the
distribution of said shares to the shareholders of Premium Bond, as provided in
this Agreement, will constitute a reorganization within the meaning of Section
368 of the Code, and Premium Bond and Diversified Bond will each be considered
"a party to a reorganization" within the meaning of Section 368(b) of the Code;
(iv) no gain or loss will be recognized by Intermediate-Term Bond, Bond, or
Premium Bond as a result of such transaction; (v) no gain or loss will be
recognized by Diversified Bond as a result of such transaction; (vi) no gain or
loss will be recognized by the shareholders of Intermediate-Term Bond on the
distribution to them by Intermediate-Term Bond of shares of Diversified Bond in
exchange for their shares of Intermediate-Term Bond; (vii) no gain or loss will
be recognized by the shareholders of Bond on the distribution to them by Bond of
shares of Diversified Bond in exchange for their shares of Bond; (viii) no gain
or loss will be recognized by the shareholders of Premium Bond on the
distribution to them by Premium Bond of shares of Diversified Bond in exchange
for their shares of Premium Bond; (ix) the aggregate basis of Diversified Bond
shares received by each shareholder of Intermediate-Term Bond will be the same
as the aggregate basis of the shareholder's Intermediate-Term Bond shares
immediately prior to the transaction; (x) the aggregate basis of Diversified
Bond shares received by each shareholder of Bond will be the same as the
aggregate basis of the shareholder's Bond shares immediately prior to the
transaction; (xi) the aggregate basis of Diversified Bond shares received by
each shareholder of Premium Bond will be the same as the aggregate basis of the
shareholder's Premium Bond shares immediately prior to the transaction; (xii)
the basis of the Intermediate-Term Bond Assets to Diversified Bond will be the
same as the basis of the Intermediate-Term Bond Assets in the hands of
Intermediate-Term Bond immediately prior to the exchange; (xiii) the basis of
the Bond Assets to Diversified Bond will be the same as the basis of the Bond
Assets in the hands of Bond immediately prior to the exchange; (xiv) the basis
of the Premium Bond Assets to Diversified Bond will be the same as the basis of
the Premium Bond Assets in the hands of Premium Bond immediately prior to the
exchange; (xv) a shareholder's holding period for Diversified Bond shares will
be determined by including the period for which the shareholder held the shares
of Intermediate-Term Bond exchanged therefor, provided that the shareholder held
such shares of Intermediate-Term Bond as a capital asset; (xvi) a shareholder's
holding period for Diversified Bond shares will be determined by including the
period for which the shareholder held the shares of Bond exchanged therefor,
provided that the shareholder held such shares of Bond as a capital asset;
(xvii) a shareholder's holding period for Diversified Bond shares will be
determined by including the period for which the shareholder held the shares of
Premium Bond exchanged therefor, provided that the shareholder held such shares
of Premium Bond as a capital asset; (xviii) the holding period of Diversified
Bond with respect to the Intermediate-Term Bond Assets will include the period
for which the Intermediate-Term Bond Assets were held by Intermediate-Term Bond;
(xix) the holding period of Diversified Bond with respect to the Bond Assets
will include the period for which the Bond Assets were held by Bond; and (xx)
the holding period of Diversified Bond with respect to the Premium Bond Assets
will include the period for which the Premium Bond Assets were held by Premium
Bond (except to the extent that an activity or investment of Diversified Bond
has the effect of diminishing or eliminating a holding period with respect to an
asset). 15.7. The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any proceeding seeking to
enjoin consummation of the transactions contemplated by this Agreement under
Section 25(c) of the 1940 Act. 15.8. The N-14 Registration Statement shall have
become effective under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted or, to the knowledge of ACIT,
contemplated by the SEC, and the parties shall have received all permits and
other authorizations necessary under state securities laws to consummate the
transactions contemplated by this Agreement. 15.9. The President or a Vice
President of ACMF shall have certified that ACMF has performed and complied in
all material respects with each of its agreements and covenants required by this
Agreement to be performed or complied with by it prior to or at the Valuation
Time and the Effective Time. 15.10. The President or a Vice President of ACPR
shall have certified that ACPR has performed and complied in all material
respects with each of its agreements and covenants required by this Agreement to
be performed or complied with by it prior to or at the Valuation Time and the
Effective Time. 16. ACMF CONDITIONS. The obligations of ACMF hereunder with
respect to Intermediate-Term Bond and Bond shall be subject to the following
conditions precedent: 16.1. This Agreement and the transactions contemplated by
this Agreement shall have been approved by the shareholders of Intermediate-Term
Bond and the shareholders of Bond in the manner required by law. 16.2. All
representations and warranties of ACIT made in this Agreement shall be true and
correct in all material respects as if made at and as of the Valuation Time and
the Effective Time. As of the Valuation Time and the Effective Time, there shall
have been no material adverse change in the financial condition of Diversified
Bond since August 20, 2001 other than those changes incurred in the ordinary
course of business as an investment company. No action, suit or other proceeding
shall 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 herein. 16.3.
ACMF shall have received a tax opinion acceptable to ACMF, addressed to ACIT,
ACPR and ACMF in a form reasonably satisfactory to them and dated the Effective
Time, with respect to the matters specified in Section 15.6. 16.4. The N-14
Registration Statement shall have become effective under the 1933 Act and no
stop order suspending such effectiveness shall have been instituted, or to the
knowledge of ACIT, contemplated by the SEC, and the parties shall have received
all permits and other authorizations necessary under state securities laws to
consummate the transactions contemplated by this Agreement. 16.5. ACMF shall not
sell or otherwise dispose of any shares of Diversified Bond to be received in
the transactions contemplated herein, except in distribution to its shareholders
as contemplated herein. 16.6. The SEC shall not have issued any unfavorable
advisory report under Section 25(b) of the 1940 Act nor instituted any
proceeding seeking to enjoin consummation of the transactions contemplated by
this Agreement under Section 25(c) of the 1940 Act. 16.7. The President or a
Vice President of ACIT shall have certified that ACIT has performed and complied
in all material respects with each of its agreements and covenants required by
this Agreement to be performed or complied with by it prior to or at the
Valuation Time and the Effective Time. 17. ACPR CONDITIONS. The obligations of
ACPR hereunder with respect to Premium Bond shall be subject to the following
conditions precedent: 17.1. This Agreement and the transactions contemplated by
this Agreement shall have been approved by the shareholders of Premium Bond in
the manner required by law. 17.2. All representations and warranties of ACIT
made in this Agreement shall be true and correct in all material respects as if
made at and as of the Valuation Time and the Effective Time. As of the Valuation
Time and the Effective Time, there shall have been no material adverse change in
the financial condition of Diversified Bond since August 20, 2001 other than
those changes incurred in the ordinary course of business as an investment
company. No action, suit or other proceeding shall 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 herein. 17.3. ACPR shall have received a tax
opinion acceptable to ACPR, addressed to ACIT, ACPR and ACMF in a form
reasonably satisfactory to them and dated the Effective Time, with respect to
the matters specified in Section 15.6. 17.4. The N-14 Registration Statement
shall have become effective under the 1933 Act and no stop order suspending such
effectiveness shall have been instituted, or to the knowledge of ACIT,
contemplated by the SEC, and the parties shall have received all permits and
other authorizations necessary under state securities laws to consummate the
transactions contemplated by this Agreement. 17.5. ACPR shall not sell or
otherwise dispose of any shares of Diversified Bond to be received in the
transactions contemplated herein, except in distribution to its shareholders as
contemplated herein. 17.6. The SEC shall not have issued any unfavorable
advisory report under Section 25(b) of the 1940 Act nor instituted any
proceeding seeking to enjoin consummation of the transactions contemplated by
this Agreement under Section 25(c) of the 1940 Act. 17.7. The President or a
Vice President of ACIT shall have certified that ACIT has performed and complied
in all material respects with each of its agreements and covenants required by
this Agreement to be performed or complied with by it prior to or at the
Valuation Time and the Effective Time. 18. TAX DOCUMENTS. 18.1. ACMF
shall deliver to ACIT at the Effective Time confirmations or other adequate
evidence as to the adjusted tax basis of the Intermediate-Term Bond Assets then
delivered to Diversified Bond in accordance with the terms of this Agreement.
18.2. ACMF shall deliver to ACIT at the Effective Time confirmations or other
adequate evidence as to the adjusted tax basis of the Bond Assets then delivered
to Diversified Bond in accordance with the terms of this Agreement. 18.3. ACPR
shall deliver to ACIT at the Effective Time confirmations or other adequate
evidence as to the adjusted tax basis of the Premium Bond Assets then delivered
to Diversified Bond in accordance with the terms of this Agreement. 19. FURTHER
ASSURANCES. Subject to the terms and conditions herein provided, each of the
parties hereto shall use its best efforts to take, or cause to be taken, such
action, to execute and deliver, or cause to be executed and delivered, such
additional documents and instruments, and to do, or cause to be done, all things
necessary, proper or advisable under the provisions of this Agreement and under
applicable law to consummate and make effective the transactions contemplated by
this Agreement. 20. TERMINATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties set forth in this Agreement shall
terminate at the Effective Time. 21. TERMINATION OF AGREEMENT. 21.1. This
Agreement may be terminated prior to the Effective Time by the Board of Trustees
of ACIT, the Board of Directors of ACMF, or the Board of Directors of ACPR as
provided below: 21.1.1. By ACIT if the conditions set forth in Section 15 are
not satisfied as specified in said Section; 21.1.2. By ACMF if the conditions
set forth in Section 16 are not satisfied as specified in said Section; 21.1.3.
By ACPR if the conditions set forth in Section 17 are not satisfied as specified
in said Section; 21.1.4. By the mutual consent of the parties. 21.2. If a party
terminates this Agreement because one or more of its conditions precedent have
not been fulfilled, or if this Agreement is terminated by mutual consent, this
Agreement will become null and void without any liability of any party or any of
their investment portfolios to the others; provided, however, that if such
termination is by ACIT pursuant to Section 21.1.1 as a result of a breach by
either ACMF or ACPR of any of its representations, warranties or covenants in
this Agreement, or such termination is by ACMF pursuant to Section 21.1.2 as a
result of a breach by either ACIT or ACPR of any of its representations,
warranties or covenants in this Agreement, or such termination is by ACPR
pursuant to Section 21.1.3 as a result of a breach by either ACIT or ACMF of any
of its representations, warranties or covenants in this Agreement, nothing
herein shall affect a non-breaching party's right to damages on account of such
other party's breach. 22. AMENDMENT AND WAIVER. At any time prior to or (to the
fullest extent permitted by law) after approval of this Agreement by the
shareholders of ACMF and ACPR, (a) the parties hereto may, by written agreement
authorized by their respective Board of Directors or Trustees, as the case may
be, or their respective Presidents or any Vice Presidents, and with or without
the approval of their shareholders, amend any of the provisions of this
Agreement, and (b) either party may waive any breach by the other party or the
failure to satisfy any of the conditions to its obligations (such waiver to be
in writing and executed by the President or Vice President of the waiving party
with or without the approval of such party's shareholders). 23. GOVERNING LAW.
This Agreement and the transactions contemplated hereby shall be governed,
construed and enforced in accordance with the laws of Massachusetts without
giving effect to the conflicts of law principles otherwise applicable therein.
24. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the respective
successors and permitted assigns of the parties hereto. This Agreement and the
rights, obligations and liabilities hereunder may not be assigned by either
party without the consent of the other party. 25. BENEFICIARIES. Nothing
contained in this Agreement shall be deemed to create rights in persons not
parties hereto, other than the successors and permitted assigns of the parties.
26. ACIT LIABILITY. 26.1. The name "American Century Investment Trust" and
"Trustees of American Century Investment Trust" refer respectively to the trust
created and the trustees, as trustees but not individually or personally, acting
from time to time under an Amended and Restated Agreement and Declaration of
Trust dated as of March 9, 1998, as amended, which is hereby referred to and
copies of which are on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of ACIT. The
obligations of ACIT entered into in the name or on behalf thereof by any of its
trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the trustees, shareholders or
representatives of ACIT personally, but bind only the trust property, and all
persons dealing with any portfolio of ACIT must look solely to the trust
property belonging to such portfolio for the enforcement of any claims against
ACIT. 26.2. All parties specifically acknowledge and agree that any liability of
ACIT under this Agreement with respect to Diversified Bond, or in connection
with the transactions contemplated herein with respect to Diversified Bond,
shall be discharged only out of the assets of Diversified Bond and that no other
portfolio of ACIT, if any, shall be liable with respect thereto. 27. ACMF
LIABILITY. 27.1. All parties specifically acknowledge and agree that any
liability of ACMF under this Agreement with respect to Intermediate-Term Bond or
in connection with the transactions contemplated herein with respect to
Intermediate-Term Bond, shall be discharged only out of the Intermediate- Term
Bond Assets and that no other portfolio of ACMF shall be liable with respect
thereto. 27.2. All parties specifically acknowledge and agree that any liability
of ACMF under this Agreement with respect to Bond or in connection with the
transactions contemplated herein with respect to bond, shall be discharged only
out of the Bond Assets and that no other portfolio of ACMF shall be liable with
respect thereto. 28. ACPR LIABILITY. 28.1. All parties specifically acknowledge
and agree that any liability of ACPR under this Agreement with respect to
Premium Bond or in connection with the transactions contemplated herein with
respect to Premium Bond, shall be discharged only out of the Premium Bond Assets
and that no other portfolio of ACPR shall be liable with respect thereto. 29.
NOTICES. All notices required or permitted herein shall be in writing and shall
be deemed to be properly given when delivered personally or by telecopier to the
party entitled to receive the notice or when sent by certified or registered
mail, postage prepaid, or delivered to a nationally recognized overnight courier
service, in each case properly addressed to the party entitled to receive such
notice at the address or telecopier number stated below or to such other address
or telecopier number as may hereafter be furnished in writing by notice
similarly given by one party to the other party hereto: If to American Century
Investment Trust, American Century Mutual Funds, Inc., or American Century
Premium Reserves, Inc.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ 30. EXPENSES. Expenses incurred in connection with the Reorganization are
the sole responsibility of and will be borne by American Century Investment
Management, Inc. or one or more of its affiliates. 31. ENTIRE AGREEMENT. This
Agreement embodies the entire agreement and understanding of the parties hereto
and supersedes any and all prior agreements, arrangements and understandings
relating to matters provided for herein. 32. COUNTERPARTS. This Agreement may be
executed in any number of counterparts, each of which, when executed and
delivered shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto
have caused this instrument to be executed by their duly authorized officers
designated below as of the date first written.
AMERICAN CENTURY INVESTMENT TRUST
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Vice President
ATTEST: /s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
AMERICAN CENTURY MUTUAL FUNDS, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Vice President
ATTEST: /s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
AMERICAN CENTURY PREMIUM RESERVES, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Vice President
ATTEST: /s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
