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 theValuation 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.:
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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/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Vice President
ATTEST: /s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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AMERICAN CENTURY MUTUAL FUNDS, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Vice President
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AMERICAN CENTURY PREMIUM RESERVES, INC.
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Vice President
ATTEST: /s/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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