AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this 31st day of August 2007
by and between American Century California Tax-Free and Municipal Funds, a Massachusetts business trust, with its
principal place of business at 0000 Xxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000-0000 (the "Trust"), with respect to
its California Tax-Free Bond Fund (the "Acquiring Fund"), and the Trust with respect to its California
Limited-Term Tax-Free Fund (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
Section-368 of the United States 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 Investor Class Shares of the Acquiring Fund ("Acquiring Fund Shares"); and
(ii) the distribution of Investor Class Shares of the Acquiring Fund to the holders of Investor Class 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 and Acquiring Fund are both separate series of the Trust, the Trust is an
open-end, registered management investment company 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 Trustees of the Trust 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 Trustees of the Trust 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 Investor Class shares of the Acquired Fund will receive Investor Class shares of the
Acquiring Fund. Such transaction 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.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all of its liabilities and
obligations prior to the Closing Date other than the ordinary course liabilities reflected in the Acquired Fund's
net asset value incurred by the Acquired Fund prior to the Closing Date in connection with its on-going business
operations (including accrued fees and expenses and payables for securities purchased or for shares redeemed)
("Acquired Fund Ordinary Course Liabilities"). Subject to the terms and conditions contained in this Agreement and
on the basis of the representations and warranties contained in this Agreement, on the Closing Date, the
Acquiring Fund shall assume and thereafter in due course pay and fully satisfy, discharge or perform the Acquired
Fund Ordinary Course Liabilities. For avoidance of doubt, the Acquiring Fund shall not assume or agree to pay,
satisfy, discharge or perform any contingent liabilities, or any liabilities arising under any plan adopted by
the Acquired Fund under Rule 12b-1 with respect to the sale of the Acquired Fund's shares prior to the Closing
Date.
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.
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 Amended and Restated Agreement and Declaration of Trust, 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 Amended and Restated Agreement and Declaration of Trust, 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 August 31, 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 JPMorgan Chase Banks, 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 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 American Century 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 Trust 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 Trust, on behalf of the Acquired Fund, represents and
warrants to the Trust on behalf of the Acquiring Fund as follows:
a) The Acquired Fund is a legally designated, separate series of a business trust duly organized, validly
existing and in good standing under the laws of Massachusetts.
b) The Trust is registered as an open-end management investment company under the 1940 Act, and the
Acquired Fund'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 will not,
result in the violation of any provision of the Trust's Amended and Restated Agreement and Declaration
of Trust 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 August 31, 2006, 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 accounting firm, 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 February 28, 2007, 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.
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 Massachusetts, 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 or the 1940 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 Trustees. 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 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 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 Massachusetts law for the
execution of this Agreement by the Trust, for itself and on behalf of the Acquired Fund, except for the
filing of any articles, certificates or other documents that may be required under Massachusetts 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.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Trust on behalf of the Acquiring Fund represents and
warrants to the Trust on behalf of the Acquired Fund as follows:
a) The Acquiring Fund is a legally designated, separate series of a business trust duly organized, validly
existing and in good standing under the laws of Massachusetts.
b) The Trust is registered as an open-end management investment company under the 1940 Act, and the
Acquiring Fund'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 in violation of, and the execution, delivery and performance of this Agreement
will not result in a violation of any provision of the Trust's Amended and Restated Agreement and
Declaration of Trust 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 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 August 31, 2006, 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 accounting firm, 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 February 28, 2007, 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 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 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 Massachusetts law for the execution of this Agreement by the Trust, for itself, and
behalf of the Acquiring Fund, except for the filing of any articles, certificates or other documents
that may be required under Massachusetts 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 course of business will include customary dividends and shareholder purchases and
redemptions.
5.2 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.
5.3 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.
5.4 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.
5.5 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 Trust's Treasurer.
5.6 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 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. In addition, the Acquired Fund shall declare and pay any dividends
for the period between the Closing Date and the next business day following the Closing Date to the Acquired Fund
Shareholders.
5.7 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.
5.8 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 Trust'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:
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 Trust'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 Trust.
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 Trustees in accordance with applicable law and the
provisions of the Trust's Amended and Restated Agreement and Declaration of Trust 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.
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 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
therefore were held by such shareholder, provided the Acquired Fund Shares are held as capital assets at
the time of the Reorganization.
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 8.4.
ARTICLE IX
EXPENSES
As soon as practical after the Closing, American Century Investment Management, Inc., as advisor to the
Acquiring Fund shall bear the expenses associated with the Reorganization. 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)-accounting fees; (b) legal fees incurred by each
Fund; and (c)-other related administrative or operational costs.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Trust, on behalf of the Acquiring Fund, and the Trust, 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 X I
TERMINATION
This Agreement may be terminated by the mutual agreement of the Trust and the Trust. In addition, the
Trust 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 the Trust's Board of Trustees, that the consummation of the transactions contemplated
herein is not in the best interest of the Acquired Fund or Acquiring Fund, 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 Acquired Fund, or the Trust, or their respective directors or officers, to
the other party or its directors or officers.
ARTICLE XI I
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 Trust as specifically authorized by the Board of Trustees.
ARTICLE XII I
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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of the date first written
above.
AMERICAN CENTURY CALIFORNIA
TAX-FREE AND MUNICIPAL FUNDS
on behalf of its portfolio,
CALIFORNIA LIMITED-TERM TAX-FREE FUND
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Senior Vice President
AMERICAN CENTURY CALIFORNIA
TAX-FREE AND MUNICIPAL FUNDS
on behalf of its portfolio,
CALIFORNIA TAX-FREE BOND FUND
By: /s/ Xxxxx X. Xxxxxxxxxx
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
