AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
AMERICAN CENTURY GOVERNMENT INCOME TRUST
AMERICAN CENTURY MUTUAL FUNDS, INC.
and
AMERICAN CENTURY INVESTMENT TRUST
TABLE OF CONTENTS
1. Transfer of Assets of Intermediate-Term Bond..........................1
2. Transfer of Assets of Bond
3. Transfer of Assets of Premium Bond
4. Liquidating Distribution and Termination of Intermediate-Term Bond....2
5. Liquidating Distribution and Termination of Bond
6. Liquidating Distribution and Termination of Premium Bond
7. Valuation Time........................................................3
8. Certain Representations, Warranties and Agreements of ACMF............3
9. Certain Representations, Warranties and Agreements of ACGIT...........6
10. Certain Representations, Warranties and Agreements of ACIT
11. Shareholder Action on Behalf of Intermediate-Term Bond................7
12. Shareholder Action on Behalf of Bond
13. Shareholder Action on Behalf of Premium Bond
14. Registration Statement and Proxy Solicitation Materials...............8
15. Effective Time of the Reorganization..................................8
16. ACGIT's Conditions....................................................9
17. ACMF's Conditions....................................................10
18. ACIT's Conditions
19. Tax Documents........................................................11
20. Further Assurances...................................................11
21. Termination of Representations and Warranties........................12
22. Termination of Agreement.............................................12
23. Amendment and Waiver.................................................12
24. Governing Law........................................................13
25. Successors and Assigns...............................................13
26. Beneficiaries........................................................13
27. ACGIT Liability......................................................13
28. ACMF Liability.......................................................13
29. ACIT Liability
30. Notices..............................................................14
31. Expenses.............................................................14
32. Entire Agreement.....................................................14
33. Counterparts.........................................................14
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION made as of __________, 2001 by and
between American Century Government Income Trust, a Massachusetts business trust
("ACGIT"), 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, ACGIT, 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 ACMPR. 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 ACMR, 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 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'S 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'S 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 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;
21.1.3. 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. 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.:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
29. 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.
30. 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.
31. 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/▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
