EXHIBIT 99.4
[FORM OF]
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
WITH RESPECT TO ITS AMERICAN CENTURY EQUITY GROWTH FUND
AND
XXXX FUNDS, INC.
WITH RESPECT TO ITS XXXX TOTAL QUALITY MANAGEMENT FUND
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this [__] day of [_____________], by and between AMERICAN CENTURY QUANTITATIVE
EQUITY FUNDS, INC., a Maryland corporation, with its principal place of business
at 0000 Xxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000-0000 (the "Maryland
Corporation"), with respect to its American Century Equity Growth Fund (the
"Acquiring Fund") and XXXX FUNDS, INC., a Minnesota corporation, with its
principal place of business at 0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxx,
Xxxxxxxxx 00000 (the "Minnesota Corporation"), with respect to its Xxxx Total
Quality Management Fund, a series of the Minnesota Corporation (the "Acquired
Fund" and, collectively with the Acquiring Fund, the "Funds").
RECITALS
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer of
all of the assets of the Acquired Fund in exchange for Adviser Shares, Class C
Shares and Investor Shares, par value $0.01 per share, of the Acquiring Fund
("Acquiring Fund Shares"); and (ii) the distribution of Advisor Shares of the
Acquiring Fund to the holders of Class A Shares of the Acquired Fund, the
distribution of Class C Shares of the Acquiring Fund to the holders of Class C
Shares of the Acquired Fund, the distribution of Investor Shares of the
Acquiring Fund to the holders of Class I Shares of the Acquired Fund, and the
liquidation of the Acquired Fund as provided herein, all upon the terms and
conditions set forth in this Agreement (the "Reorganization").
WHEREAS, the Acquired Fund is a separate series of the Minnesota
Corporation, the Acquiring Fund is a separate series of the Maryland
Corporation, and the Maryland Corporation and the Minnesota Corporation are
open-end, registered management investment companies and the Acquired Fund owns
securities that generally are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, each of the Acquiring Fund and the Acquired Fund is authorized to
issue its respective shares;
WHEREAS, the Directors of the Maryland Corporation have determined that the
Reorganization, with respect to the Acquiring Fund, is in the best interests of
the Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of the Reorganization; and
WHEREAS, the Directors of the Minnesota Corporation have determined that
the Reorganization, with respect to the Acquired Fund, is in the best interests
of the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR
ACQUIRING FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein and
on the basis of the representations and warranties contained herein, the
Acquired Fund agrees to transfer all of its assets, as set forth in paragraph
1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees to deliver to
the Acquired Fund the number of full and fractional Acquiring Fund Shares,
determined by dividing the assets of the Acquired Fund, computed in the manner
and as of the time and date set forth in paragraph 2.1 by the net asset value
per share of the Acquiring Fund Shares computed in the manner and as of the time
and date set forth in paragraph 2.2. Holders of Class A Shares of the Acquired
Fund will receive Adviser Class Shares of the Acquiring Fund, holders of Class C
Shares of the Acquired Fund will receive Class C Shares of the Acquiring Fund
and holders of Class I Shares of the Acquired Fund will receive Investor Shares
of the Acquiring Fund. Such transactions shall take place at the closing on the
Closing Date provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be acquired
by the Acquiring Fund shall consist of property having a value equal to the
total net assets of the Acquired Fund, including, without limitation, cash,
securities, commodities, interests in futures and dividends or interest
receivable, owned by the Acquired Fund and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Fund on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than as the result of changes in the market values of securities or
otherwise occurring in the ordinary course of business in connection with the
purchase and sale of securities, the issuance and redemption of Acquired Fund
shares and the payment of normal operating expenses, dividends and capital gains
distributions.
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1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all of
its liabilities and obligations prior to the Closing Date. The Acquiring Fund
will not assume any liabilities of any kind whatsoever, whether or not such
liability is accrued or fixed, known or unknown, absolute or contingent or
determined or determinable or when due or become due, of the Acquired Fund.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as
is conveniently practicable: (a) the Acquired Fund will distribute in complete
liquidation of the Acquired Fund, pro rata to its shareholders of record,
determined as of the close of business on the Closing Date (the "Acquired Fund
Shareholders"), all of the Acquiring Fund Shares received by the Acquired Fund
pursuant to paragraph 1.1; and (b) the Acquired Fund will thereupon proceed to
dissolve and terminate as set forth in paragraph 1.8 below. Such distribution
will be accomplished by the transfer of Acquiring Fund Shares credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share records of the Acquiring Fund in the name of the Acquired Fund
Shareholders, and representing the respective pro rata number of Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Acquired
Fund (the "Acquired Fund Shares") will simultaneously be canceled on the books
of the Acquired Fund. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such transfer. After the
Closing Date, the Acquired Fund shall not conduct any business except in
connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown
on the books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will
be issued simultaneously to the Acquired Fund, in an amount equal in value to
the aggregate net asset value of the Acquired Fund Shares, to be distributed to
Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund Shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Acquired
Fund is and shall remain the responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall be terminated promptly following
the Closing Date and the making of all distributions pursuant to paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and records of the Acquired Fund,
including all books and records required to be maintained under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, shall be available to the Acquiring Fund from and after the Closing
Date and shall be turned over to the Acquiring Fund as soon as practicable
following the Closing Date.
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ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets at
the closing on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's Articles of Incorporation, Bylaws and the Acquiring Fund's then
current prospectus and statement of additional information.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund
Shares shall be the net asset value per share computed at the closing on the
Closing Date, using the valuation procedures set forth in the Acquiring Fund's
Articles of Incorporation, Bylaws and the Acquiring Fund's then current
prospectus and statement of additional information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund's shares to be
issued (including fractional shares, if any) in exchange for the Acquired Fund's
assets, shall be determined as set forth in paragraph 1.1.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
American Century Investment Management, Inc., on behalf of the Acquiring Fund
and the Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about February 23, 2007, or
such other date(s) as the parties may agree to in writing (the "Closing Date").
All acts taking place at the closing shall be deemed to take place at 4:00 p.m.,
Eastern Time, on the Closing Date unless otherwise provided herein. The closing
shall be held at the offices of American Century Investments, 0000 Xxxx Xxxxxx,
Xxxxxx Xxxx, Xxxxxxxx 00000-0000, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. The Acquired Fund shall cause U.S. Bank, N.A.,
as custodian for the Acquired Fund (the "Custodian"), to deliver at the Closing
a certificate of an authorized officer stating that: (a) the Acquired Fund's
portfolio securities, cash, and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the scheduled
Closing Date, either: (a) the New York Stock Exchange ("NYSE") or another
primary exchange on which the portfolio securities of the Acquiring Fund or the
Acquired Fund are purchased or sold, shall be closed to trading or trading on
such
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exchange shall be restricted; or (b) trading or the reporting of trading on the
NYSE or elsewhere shall be disrupted so that accurate appraisal of the value of
the net assets of the Acquiring Fund or the Acquired Fund is impracticable, the
Closing Date shall be postponed until the first business day after the day when
trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. The Acquired Fund shall cause U.S.
Bancorp Fund Services, LLC, as transfer agent for the Acquired Fund as of the
Closing Date, to deliver at the Closing a certificate of an authorized officer
stating that its records contain the names and addresses of Acquired Fund
Shareholders, and the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the Closing. The Acquiring
Fund shall issue and deliver or cause American Century Services, LLC, its
transfer agent, to issue and deliver a confirmation evidencing Acquiring Fund
Shares to be credited on the Closing Date to the Secretary of the Minnesota
Corporation or provide evidence satisfactory to the Acquired Fund that the
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, receipts,
officer's certificates, transfer agent certificates, custodian certificates,
opinions, and other certificates and documents, if any, as such other party or
its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Minnesota Corporation, on
behalf of the Acquired Fund, represents and warrants to the Maryland Corporation
as follows:
a) The Acquired Fund is a legally designated, separate series of a
corporation duly organized, validly existing and in good standing
under the laws of Minnesota.
b) The Minnesota Corporation is registered as an open-end management
investment company under the 1940 Act, and the Minnesota Corporation's
registration with the Securities and Exchange Commission (the
"Commission") as an investment company under the 1940 Act is in full
force and effect.
c) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, and the rules and regulations thereunder, and
do not include any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
d) The Acquired Fund is not, and the execution, delivery, and performance
of this Agreement (subject to shareholder approval) will not, result
in the violation of
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any provision of the Minnesota Corporation's Articles of Incorporation
or By-Laws or of any material agreement, indenture, instrument,
contract, lease, or other undertaking to which the Acquired Fund is a
party or by which it is bound.
e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to
it before the Closing Date, except for liabilities, if any, to be
discharged as provided in paragraph 1.3 hereof.
f) No litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any of its
properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition, the conduct of its
business, or the ability of the Acquired Fund to carry out the
transactions contemplated by this Agreement. The Acquired Fund knows
of no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transactions contemplated herein.
g) The financial statements of the Acquired Fund as of September 30,
2005, and for the fiscal year then ended, have been prepared in
accordance with generally accepted accounting principles, and audited
by PricewaterhouseCoopers LLP, independent registered public
accountants, and such statements (copies of which have been furnished
to the Acquiring Fund) fairly and accurately reflect the financial
condition of the Acquired Fund as of such date, and there are no known
contingent liabilities of the Acquired Fund as of such date that are
not disclosed in such statements.
h) The unaudited financial statements of the Acquired Fund as of March
31, 2006, and for the six months then ended, have been prepared in
accordance with generally accepted accounting principles, and such
statements (copies of which have been furnished to the Acquiring Fund)
fairly and accurately reflect the financial condition of the Acquired
Fund as of such date, and there are no known contingent liabilities of
the Acquired Fund as of such date that are not disclosed in such
statements.
i) Since the date of the financial statements referred to in subparagraph
(h) above, there have been no material adverse changes in the Acquired
Fund's financial condition, assets, liabilities or business (other
than changes occurring in the ordinary course of business), or any
incurrence by the Acquired Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as
identified and disclosed by the Acquired Fund on SCHEDULE 4.1 to this
Agreement. For the purposes of this subparagraph (i), a decline in the
net asset value of the Acquired Fund in and of itself shall not
constitute a material adverse change.
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j) All federal and other tax returns and reports of the Acquired Fund
required by law to be filed, have been timely and accurately filed,
and all federal and other taxes shown due on such returns and reports
have been paid, or provision shall have been made for the payment
thereof. To the best of the Acquired Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with
respect to such returns.
k) All issued and outstanding Acquired Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquired
Fund. All of the issued and outstanding Acquired Fund Shares will, at
the time of the Closing Date, be held by the persons and in the
amounts set forth in the records of the Acquired Fund's transfer agent
as provided in paragraph 3.4. The Acquired Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any of
the Acquired Fund Shares, and has no outstanding securities
convertible into any of the Acquired Fund Shares.
l) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2, and full right, power, and authority
to sell, assign, transfer, and deliver such assets hereunder, free of
any lien or other encumbrance, except those liens or encumbrances to
which the Acquiring Fund has received notice, and, upon delivery and
payment for such assets, and the filing of any articles, certificates
or other documents under the laws of Minnesota, the Acquiring Fund
will acquire good and marketable title, subject to no restrictions on
the full transfer of such assets, other than such restrictions as
might arise under the 1933 Act, and other than as disclosed to and
accepted by the Acquiring Fund.
m) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquired
Fund and its Board of Directors. Subject to approval by the Acquired
Fund Shareholders, this Agreement constitutes a valid and binding
obligation of the Acquired Fund, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights and to general equity principles.
n) The information to be furnished by the Acquired Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions contemplated herein shall comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
o) The Acquired Fund has elected to qualify and has qualified as a
"regulated investment company" under the Code (a "RIC"), as of and
since its first taxable year; has been a RIC under the Code at all
times since the end of its first taxable
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year when it so qualified; and qualifies and will continue to qualify
as a RIC under the Code for its taxable year ending upon its
liquidation.
p) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act or Minnesota law for the
execution of this Agreement by the Minnesota Corporation, for itself
and on behalf of the Acquired Fund, except for the effectiveness of
the Registration Statement (as defined in paragraph 5.7), and the
filing of any articles, certificates or other documents that may be
required under Minnesota law, and except for such other consents,
approvals, authorizations and filings as have been made or received,
and except for such consents, approvals, authorizations and filings as
may be required subsequent to the Closing Date, it being understood,
however, that this Agreement and the transactions contemplated herein
must be approved by the shareholders of the Acquired Fund as described
in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Maryland Corporation on
behalf of the Acquiring Fund represents and warrants to the Minnesota
Corporation as follows:
a) The Acquiring Fund is a legally designated, separate series of a
corporation duly organized, validly existing and in good standing
under the laws of Maryland.
b) The Maryland Corporation is registered as an open-end management
investment company under the 1940 Act, and the Maryland Corporation's
registration with the Commission as an investment company under the
1940 Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act, and the rules and
regulations thereunder, and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
or necessary to make such statements therein, in light of the
circumstances under which they were made, not misleading.
d) The Acquiring Fund is not, and the execution, delivery and performance
of this Agreement will not, result in a violation of any provision of
the Maryland Corporation's Articles of Incorporation or By-Laws or of
any material agreement, indenture, instrument, contract, lease, or
other undertaking to which the Acquiring Fund is a party or by which
it is bound.
e) No litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition, the conduct of its
business, or the ability of the Acquiring Fund to carry out the
transactions contemplated by this Agreement. The Acquiring Fund knows
of no facts that
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might form the basis for the institution of such proceedings and it is
not a party to or subject to the provisions of any order, decree, or
judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the
transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of December 31,
2005, and for the fiscal year then ended, have been prepared in
accordance with generally accepted accounting principles, and audited
by PricewaterhouseCoopers LLP, independent registered public
accountants, and such statements (copies of which have been furnished
to the Acquired Fund) fairly and accurately reflect the financial
condition of the Acquiring Fund as of such date, and there are no
known contingent liabilities of the Acquiring Fund as of such date
that are not disclosed in such statements.
g) The unaudited financial statements of the Acquiring Fund as of June
30, 2006, and for the six months then ended, have been prepared in
accordance with generally accepted accounting principles, and such
statements (copies of which have been furnished to the Acquired Fund)
fairly and accurately reflect the financial condition of the Acquiring
Fund as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date that are not disclosed in such
statements.
h) Since the date of the financial statements referred to in subparagraph
(g) above, there have been no material adverse changes in the
Acquiring Fund's financial condition, assets, liabilities or business
(other than changes occurring in the ordinary course of business), or
any incurrence by the Acquiring Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred, except as
identified and disclosed by the Acquiring Fund on SCHEDULE 4.2 to this
Agreement. For the purposes of this subparagraph (h), a decline in the
net asset value of the Acquiring Fund in and of itself shall not
constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquiring Fund
required by law to be filed, have been timely and accurately filed and
all federal and other taxes shown due on such returns and reports have
been paid, or provision shall have been made for their payment. To the
best of the Acquiring Fund's knowledge, no such return is currently
under audit, and no assessment has been asserted with respect to such
returns.
j) All issued and outstanding Acquiring Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund has no outstanding options, warrants, or
other rights to subscribe for or purchase any Acquiring Fund Shares,
and has no outstanding securities convertible into any Acquiring Fund
Shares.
k) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquiring
Fund and its Board
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of Directors, and this Agreement constitutes a valid and binding
obligation of the Acquiring Fund, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights and to general equity principles.
l) Acquiring Fund Shares to be issued and delivered to the Acquired Fund
for the account of the Acquired Fund Shareholders pursuant to the
terms of this Agreement will, at the Closing Date, have been duly
authorized. When so issued and delivered, such shares will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable.
m) The information to be furnished by the Acquiring Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions contemplated herein shall comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
n) The Acquiring Fund has elected to qualify and has qualified as a RIC
under the Code, as of and since its first taxable year; has been a RIC
under the Code at all times since the end of its first taxable year
when it so qualified; and qualifies and shall continue to qualify as a
RIC under the Code for its current taxable year.
o) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or Maryland
law for the execution of this Agreement by the Maryland Corporation,
for itself, and on behalf of the Acquiring Fund, except for the
effectiveness of the Registration Statement (as defined in paragraph
5.7), and the filing of any articles, certificates or other documents
that may be required under Maryland law, and except for such other
consents, approvals, authorizations and filings as have been made or
received, and except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date.
p) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act,
and any state blue sky or securities laws as it may deem appropriate
in order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund
will each operate its respective business in the ordinary course between the
date of this Agreement and the Closing Date, it being understood that such
ordinary
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course of business will include customary dividends and shareholder purchases
and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Minnesota Corporation will call a special
meeting of the Acquired Fund Shareholders to consider and act upon this
Agreement and to take all other appropriate action necessary to obtain approval
of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within sixty days after the Closing Date, the Acquired Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be certified by the Minnesota
Corporation's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT.
The Maryland Corporation will review and file with the Commission a registration
statement on Form N-14 relating to the Acquiring Fund Shares to be issued to
shareholders of the Acquired Fund (the "Registration Statement"). The
Registration Statement shall include a proxy statement and a prospectus of the
Acquiring Fund relating to the transaction contemplated by this Agreement. The
Registration Statement shall be in compliance with the 1933 Act, the 1934 Act
and the 1940 Act, as applicable. Each party will provide the other party with
the materials and information necessary to prepare the Registration Statement
(the "Proxy Materials"), for inclusion therein, in connection with the meeting
of the Acquired Fund Shareholders to consider the approval of this Agreement and
the transactions contemplated herein.
5.8 DISTRIBUTIONS. On or before the Closing Date, the Acquired Fund shall
have declared and paid a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to the Acquired Fund
Shareholders all
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of the Acquired Fund's investment company taxable income (computed without
regard to any deduction for dividends paid), if any, plus the excess, if any, of
its interest income excludible from gross income under Section 103(a) of the
Code over its deductions disallowed under Sections 265 and 171(a)(2) of the Code
for all taxable periods or years ending on or before the Closing Date, and all
of its net capital gains realized (after reduction for any capital loss carry
forward), if any, in all taxable periods or years ending on or before the
Closing Date.
5.9 TAX RETURNS. The Acquiring Fund and the Acquired Fund agree to
cooperate with each other after the Closing in filing any tax return, amended
return or claim for refund, determining a liability for taxes or a right to a
refund of taxes or participating in or conducting any audit or other proceeding
in respect of taxes.
5.10 CONFIRMATION OF TAX BASIS. The Acquired Fund shall deliver to the
Acquiring Fund on the Closing Date confirmations or other adequate evidence as
to the tax basis and holding period of each of the Assets delivered to the
Acquiring Fund hereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by the Acquiring Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
subject to the following conditions:
6.1 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Acquired Fund on such Closing Date a certificate executed in
the Acquiring Fund's name by the Maryland Corporation's President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquired Fund and dated as of the Closing Date, to such
effect and as to such other matters as the Acquired Fund shall reasonably
request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by the Acquired Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
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7.1 All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Minnesota Corporation's President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of such Closing Date, to such
effect and as to such other matters as the Acquiring Fund shall reasonably
request.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer of the Minnesota Corporation.
7.3 The reorganization involving the American Century New Opportunities II
Fund and the Xxxx Emerging Growth Fund shall have been approved by the
shareholders of the Xxxx Emerging Growth Fund.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with respect
to the Acquired Fund, shall have been approved by the requisite vote of the
Board of Directors and the Acquired Fund Shareholders in accordance with
applicable law and the provisions of the Minnesota Corporation's Articles of
Incorporation and By-Laws. Certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Acquired
Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, 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.
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8.3 All required consents of other parties and all other consents, orders,
and permits of federal, state and local regulatory authorities (including those
of the Commission and of state securities authorities, including any necessary
"no-action" positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued. To the best knowledge of the parties to this Agreement, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 0000 Xxx.
8.5 The parties shall have received an opinion of Xxxx Xxxxx LLP
substantially to the effect that for federal income tax purposes:
a) The transfer of all of the Acquired Fund's assets to the Acquiring
Fund solely in exchange for Acquiring Fund Shares (followed by the
distribution of Acquiring Fund Shares to the Acquired Fund
Shareholders in dissolution and liquidation of the Acquired Fund) will
constitute a "reorganization" within the meaning of Section 368(a) of
the Code, and the Acquiring Fund and the Acquired Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for
Acquiring Fund Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund solely in
exchange for Acquiring Fund Shares or upon the distribution (whether
actual or constructive) of Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their Acquired Fund Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder
upon the exchange of its Acquired Fund Shares for Acquiring Fund
Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund Shares held by it
immediately prior to the Reorganization. The holding period of the
Acquiring Fund Shares received by each Acquired Fund Shareholder will
include the period during which the Acquired Fund Shares exchanged
therefor were held by such shareholder, provided the Acquired Fund
Shares are held as capital assets at the time of the Reorganization.
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f) The tax basis of the Acquired Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Acquired
Fund immediately prior to the Reorganization. The holding period of
the assets of the Acquired Fund in the hands of the Acquiring Fund
will include the period during which those assets were held by the
Acquired Fund.
Such opinion shall be based on customary assumptions and such
representations Xxxx Xxxxx LLP may reasonably request, and the
Acquired Fund and Acquiring Fund will cooperate to make and certify
the accuracy of such representations. The foregoing opinion may state
that no opinion is expressed as to the effect of the Reorganization on
the Acquiring Fund, the Acquired Fund or any Acquired Fund Shareholder
with respect to any asset as to which unrealized gain or loss is
required to be recognized for federal income tax purposes at the end
of a taxable year (or on the termination or transfer thereof) under a
xxxx-to-market system of accounting. Notwithstanding anything herein
to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this paragraph 8.5.
ARTICLE IX
EXPENSES
As soon as practical after the Closing, American Century Investment
Management, Inc., as adviser to the Acquiring Fund and Xxxx Investment Advisors,
LLC, as adviser to the Acquired Fund, or their affiliates, shall each pay
one-half of all expenses associated with the Acquiring Fund's and Acquired
Fund's participation in the Reorganization (provided, that American Century
Management, Inc. and Xxxx Investment Advisors, LLC shall share reasonable and
necessary expenses associated with the Reorganization, together with reasonable
and necessary expenses associated with the reorganization involving the American
Century New Opportunities II Fund and the Xxxx Emerging Growth Fund, in excess
of $630,000 in the aggregate subject to mutual agreement), and, except as
provided in the following proviso, in no event shall the Acquiring Fund or
Acquired Fund bear such expenses; provided, however, that the Acquiring Fund
shall bear expenses associated with the qualification of Acquiring Fund Shares
for sale in the various states. Reorganization expenses include, without
limitation: (a) expenses associated with the preparation and filing of the Proxy
Materials; (b) postage; (c) printing; (d) accounting fees; (e) legal fees
incurred by each Fund; (f) solicitation costs of the transaction; and (g) other
related administrative or operational costs. American Century Investment
Management, Inc. and Xxxx Investment Advisors, LLC have entered into a
Transaction Agreement dated September 13, 2006 in which they agreed, in Section
6.3 thereof, to pay such expenses as contemplated in this Article IX. The
Acquiring Fund and the Acquired Fund are third party beneficiaries to Section
6.3 of that Transaction Agreement.
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ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Maryland Corporation, on behalf of the Acquiring Fund, and the
Minnesota Corporation, on behalf of the Acquired Fund, agree that neither party
has made to the other party any representation, warranty and/or covenant not set
forth herein, and that this Agreement constitutes the entire agreement between
the parties.
10.2 Except as specified in the next sentence set forth in this paragraph
10.2, the representations, warranties, and covenants contained in this Agreement
or in any document delivered pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing Date shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
This Agreement may be terminated by the mutual agreement of the Maryland
Corporation and the Minnesota Corporation. In addition, either the Maryland
Corporation or the Minnesota Corporation may at its option terminate this
Agreement at or before the Closing Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not
cured within 30 days;
b) a condition herein expressed to be precedent to the obligations of the
terminating party that has not been met and it reasonably appears that
it will not or cannot be met; or
c) a determination by a party's Board of Directors, as appropriate, that
the consummation of the transactions contemplated herein is not in the
best interest of the Minnesota Corporation or the Maryland
Corporation, respectively, and notice given to the other party hereto.
In the event of any such termination, in the absence of willful default, there
shall be no liability for damages on the part of the Acquiring Fund, the
Maryland Corporation, the Acquired Fund, the Minnesota Corporation, or their
respective directors or officers, to the other party or its directors or
officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the Minnesota
Corporation and
16
the Maryland Corporation as specifically authorized by their respective Board of
Directors; provided, however, that following the meeting of the Acquired Fund
Shareholders called by the Acquired Fund pursuant to paragraph 5.2 of this
Agreement, no such amendment may have the effect of changing the provisions for
determining the number of Acquiring Fund Shares to be issued to the Acquired
Fund Shareholders under this Agreement to the detriment of such shareholders
without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Missouri, without regard to the conflict of laws rules
of that or any other jurisdiction.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
XXXX FUNDS, INC.
on behalf of its portfolio,
XXXX TOTAL QUALITY MANAGEMENT FUND
--------------------------------------------
Xxxx X. Xxxxxx, Secretary
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS INC.
on behalf of its portfolio,
AMERICAN CENTURY EQUITY GROWTH FUND
--------------------------------------------
Xxxxx X. Xxxxxxxxxx, Vice President
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SCHEDULE 4.1
None
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