AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is
made as of this 23rd day of August 2013, between the Touchstone
Aggressive ETF Fund (the "Acquiring Fund"); the Touchstone
Enhanced ETF Fund (the "Acquired Fund", and collectively with
the Acquiring Fund, the "Funds"), each a series of the
Touchstone Variable Series Trust (the "Trust"); and, for
purposes of Section 9.1 only, Touchstone Advisors, Inc (the
"Advisor"). TVST is a Massachusetts business trust with its
principal place of business at 000 Xxxxxxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxx 00000.
WHEREAS, the Funds have only a single share class.
WHEREAS, the reorganization (the "Reorganization") will consist
of (i) the transfer of all of the assets of the Acquired Fund in
exchange for the shares of beneficial interest, with a par value
of $.01 per share, of the Acquiring Fund; (ii) the assumption by
the Acquiring Fund of all of the liabilities of the Acquired
Fund; and (iii) the distribution of the shares to the
shareholders of the Acquired Fund in liquidation of the Acquired
Fund as provided in this Agreement, all upon the terms and
conditions set forth in this Agreement. The parties intend that
the Reorganization shall qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "IRS Code").
WHEREAS, the Acquiring Fund and the Acquired Fund are each an
open-end, registered management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
the Acquired Fund owns securities that generally are assets of
the character in which the Acquiring Fund is permitted to
invest;
WHEREAS, the Acquiring Fund and the Acquired Fund are
authorized to issue its shares of beneficial interest;
WHEREAS, the Board of Trustees (the "Board") of the Trust,
including a majority of the Trustees who are not "interested
persons" of the Trust, as defined in the 1940 Act ("Independent
Trustees"), have determined that the Reorganization will be in
the best interests of the Acquiring Fund and its shareholders
and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of the
Reorganization;
WHEREAS, the Board, including a majority of the Independent
Trustees, have determined that it is in the best interests of
the Acquired Fund to exchange all of its assets and liabilities
for Acquiring Fund Shares and that the interests of the existing
shareholders of the Acquired Fund and the Acquiring Fund will
not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements set forth in this Agreement, the
parties covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF ACQUIRED FUND
LIABILITIES AND LIQUIDATION OF THE ACQUIRED FUND
1.1 THE EXCHANGE. Subject to the terms and conditions
herein set forth and on the basis of the representations and
warranties contained herein, the Acquired Fund agrees to
transfer all of the Acquired Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees
in exchange for the Acquired Fund's assets (i) to deliver to the
Acquired Fund full and fractional shares of the Acquiring Fund
("Acquiring Fund Shares"), computed in the manner and as of the
time and date set forth in Article II; and (ii) to assume all of
the liabilities of the Acquired Fund, as set forth in paragraph
1.3. Such transactions shall take place 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 all
property, including, without limitation, all cash, securities,
commodities, interests in futures and dividends or interest
receivables, that is 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 unaudited
financial statements, which contain a list of all of the
Acquired Fund's assets as of the date thereof. 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 said financial statements other than
those occurring in the ordinary course of its business in
connection with the purchase and sale of securities and the
payment of its normal operating expenses. The Acquired Fund
reserves the right to sell any of such securities, but will not,
without the prior written approval of the Acquiring Fund,
acquire any additional securities other than securities of the
type in which the Acquiring Fund is permitted to invest.
1.3 LIABILITIES TO BE ASSUMED. The Acquired Fund will
endeavor to discharge all of its known liabilities and
obligations prior to the Closing Date. The Acquiring Fund shall
assume all of the Acquired Fund's liabilities and obligations of
any kind whatsoever, whether absolute, accrued, contingent or
otherwise in existence on the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the
Closing Date as is conveniently practicable (the "Liquidation
Date"), (a) the Acquired Fund will liquidate and distribute pro
rata to the Acquired Fund's shareholders of record (the
"Acquired Fund Shareholders"), determined as of the close of
business on the Valuation Date (as defined below), the Acquiring
Fund Shares received by the Acquired Fund pursuant to paragraph
1.1; and (b) the Acquired Fund will thereupon proceed to
terminate as set forth in paragraph 1.8 below. Such liquidation
and distribution will be accomplished by the transfer of the
Acquiring Fund Shares then 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 names
of the Acquired Fund Shareholders and representing the
respective pro rata number of the Acquiring Fund Shares due such
shareholders. All issued and outstanding shares of the Acquired
Fund will simultaneously be canceled on the books of the
Acquired Fund. The Acquiring Fund shall not issue certificates
representing the Acquiring Fund Shares in connection with such
exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund
Shares will be shown on the books of the Acquiring Fund's
transfer agent. Shares of the Acquiring Fund will be issued in
the manner described in the Prospectus/Proxy Statement on Form
N-14 which will be distributed to shareholders of the Acquired
Fund.
1.6 TRANSFER TAXES. Any transfer taxes payable upon
issuance of the 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 up to and including the
Closing Date and such later date on which the Acquired Fund is
terminated.
1.8 TERMINATION. The Trust shall take all necessary and
appropriate steps under applicable law to terminate the Acquired
Fund promptly following the Closing Date and the making of all
distributions pursuant to paragraph 1.5.
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 computed as of the close of business on
the New York Stock Exchange on the business day preceding the
Closing Date (such time and date being hereinafter called the
"Valuation Date"), using the valuation procedures set forth in
the Trust's Declaration of Trust and the Acquiring Fund's then
current prospectus and statement of additional information or
such other valuation procedures as shall be mutually agreed upon
by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of
the Acquiring Fund Shares shall be the net asset value per share
of the Acquiring Fund computed as of the close of business on
the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Trust's Declaration of
Trust and the Acquiring Fund's then current prospectus and
statement of additional information.
2.3 SHARES TO BE ISSUED. The number of full and
fractional Acquiring Fund Shares to be issued in exchange for
the Acquired Fund's assets shall be determined by dividing the
net asset value per share of the Acquired Fund by the net asset
value per share of the Acquiring Fund on the Valuation Date,
determined in accordance with paragraph 2.2. Shareholders of
record of Class A Shares of the Acquired Fund at the Closing
Date shall be credited with full and fractional Class A Shares
of the Acquiring Fund; shareholders of record of Class C Shares
of the Acquired Fund at the Closing Date shall be credited with
full and fractional Class C Shares of the Acquiring Fund;
shareholders of record of Class Y Shares of the Acquired Fund at
the Closing Date shall be credited with full and fractional
Class Y Shares of the Acquiring Fund; and shareholders of record
of Institutional Class Shares of the Acquired Fund at the
Closing Date shall be credited with full and fractional
Institutional Class Shares of the Acquiring Fund.
2.4 DETERMINATION OF VALUE. All computations of value
shall be made by BNY Mellon Investment Servicing (US) Inc.,
the Acquiring Fund's and the Acquired Fund's accounting agent,
in accordance with its regular practice in pricing the shares
and assets of the Acquiring Fund and the Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing of the Reorganization (the
"Closing") shall take place on or about May 17, 2013 or such
other date as the parties may agree to in writing (the "Closing
Date"). All acts taking place at the Closing shall be deemed to
take place simultaneously immediately prior to the opening of
business on the Closing Date unless otherwise provided. The
Closing shall be held as of 8:00 a.m. Eastern Time at the
offices of the Trust, or at such other time and/or place as the
parties may agree.
3.2 EFFECT OF SUSPENSION IN TRADING. In the event that on
the Valuation Date (a) the New York Stock Exchange or another
primary trading market for portfolio securities of the Acquiring
Fund or the Acquired Fund shall be closed to trading or trading
thereon shall be restricted; or (b) trading or the reporting of
trading on said Exchange or elsewhere shall be disrupted so that
an accurate determination of the value of the net assets of the
Acquiring Fund or the Acquired Fund is impracticable, the
Valuation Date (and the Closing Date) shall be postponed until
the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.3 TRANSFER AGENT'S CERTIFICATE. The Acquired Fund shall
cause its transfer agent to deliver at the Closing a certificate
of an authorized officer stating that its records contain the
names and addresses of the 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 its transfer
agent, to issue and deliver, to the Secretary of the Trust a
confirmation evidencing the Acquiring Fund Shares to be credited
on the Closing Date or provide evidence satisfactory to the
Acquired Fund that such 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, if
any, receipts and other documents as such other party or its
counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Acquired
Fund represents and warrants to the Acquiring Fund as follows:
(a) The Acquired Fund is a separate investment series
of the Trust, a statutory trust duly organized, validly
existing, and in good standing under the laws of Delaware.
(b) The Acquired Fund is a separate investment series
of the Trust, which is registered as an investment company
classified as a management company of the open-end type, and its
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 of the Commission
thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein 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 violation of any
provision of the Trust's 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 prior to the Closing Date,
except for liabilities, if any, to be discharged as provided in
paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and
accepted by the Acquiring Fund, 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 herein
contemplated.
(g) The audited financial statements of the Acquired
Fund dated September 30, 2012 are in accordance with generally
accepted accounting principles consistently applied, and such
statements (copies of which have been furnished to the Acquiring
Fund) fairly 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 not disclosed
therein.
(h) Since September 30, 2012, there has not been any
material adverse change 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
otherwise disclosed to and accepted by the Acquiring Fund. For
the purposes of this subparagraph (h), a decline in the net
asset value of the Acquired Fund shall not constitute a material
adverse change.
(i) At the Closing Date, all federal and other tax
returns and reports of the Acquired Fund required by law to have
been filed by such date shall have been filed, and all federal
and other taxes shown due on said returns and reports shall 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.
(j) For each fiscal year of its operation, the
Acquired Fund has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment
company and has distributed in each such year all net investment
income and realized capital gains.
(k) The Acquired Fund is not under the jurisdiction
of a court in a "Title 11 or similar case" (within the meaning
of Section 368(a)(3)(A) of the Code);
(l) All issued and outstanding shares of the Acquired
Fund are, and at the Closing Date will be, duly and validly
issued and outstanding, fully paid and non-assessable by the
Acquired Fund. All of the issued and outstanding shares of the
Acquired Fund will, at the time of the Closing Date, be held by
the persons and in the amounts set forth in the records of the
transfer agent as provided in paragraph 3.3. The Acquired Fund
does not have outstanding any options, warrants, or other rights
to subscribe for or purchase any of the Acquired Fund shares,
nor is there outstanding any security convertible into any of
the Acquired Fund shares.
(m) 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, and, upon delivery and payment
for such assets, the Acquiring Fund will acquire good and
marketable title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise
under the 1933 Act, other than as disclosed to the Acquiring
Fund and accepted by the Acquiring Fund.
(n) The execution, delivery, and performance of this
Agreement have been duly authorized by all necessary action on
the part of the Acquired Fund and, subject to approval by the
Acquired Fund's 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.
(o) The information 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 hereby is accurate and complete in all material
respects and complies in all material respects with federal
securities and other laws and regulations thereunder applicable
thereto.
(p) The Acquired Fund has provided the Acquiring Fund
with information reasonably necessary for the preparation of a
prospectus, which included the proxy statement of the Acquired
Fund (the "Prospectus/Proxy Statement"), all of which was
included in a Registration Statement on Form N-14 of the
Acquiring Fund (the "Registration Statement"), in compliance
with the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act") and the 1940 Act in connection with the
meeting of the shareholders of the Acquired Fund to approve this
Agreement and the transactions contemplated hereby. The
Prospectus/Proxy Statement included in the Registration
Statement (other than information therein that relates to the
Acquiring Fund and any other fund described therein other than
the Acquired Fund) does 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, in
light of the circumstances under which such statements were
made, not misleading.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring
Fund represents and warrants to the Acquired Fund as follows:
(a) The Acquiring Fund is a separate investment
series of the Trust, a business trust duly organized, validly
existing, and in good standing under the laws of Massachusetts.
(b) The Acquiring Fund is a separate investment
series of the Trust, which is registered as an investment
company classified as a management company of the open-end type,
and its 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, as of the date of the Prospectus/Proxy
Statement, 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 of the Commission
thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the 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
violation of the Trust's 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) Except as otherwise disclosed in writing to the
Acquired Fund and accepted by the Acquired Fund, 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 and 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 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.
(f) The audited financial statements of the Acquiring
Fund dated September 30, 2012 are in accordance with generally
accepted accounting principles consistently applied, and such
statements (copies of which have been furnished to the Acquired
Fund) fairly 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 not disclosed
therein.
(g) Since September 30, 2012, there has not been any
material adverse change 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
otherwise disclosed to and accepted by the Acquired Fund. For
the purposes of this subparagraph (g), a decline in the net
asset value of the Acquiring Fund shall not constitute a
material adverse change.
(h) At the Closing Date, all federal and other tax
returns and reports of the Acquiring Fund required by law then
to be filed by such date shall have been filed, and all federal
and other taxes shown due on said returns and reports shall have
been paid or provision shall have been made for the payment
thereof. 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.
(i) For each fiscal year of its operation, the
Acquiring Fund has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment
company and has distributed in each such year all net investment
income and realized capital gains.
(j) All issued and outstanding Acquiring Fund Shares
are, and at the Closing Date will be, duly and validly issued
and outstanding, fully paid and non-assessable. The Acquiring
Fund does not have outstanding any options, warrants, or other
rights to subscribe for or purchase any Acquiring Fund Shares,
nor is there outstanding any security 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 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) The 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 and, when so
issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable.
(m) The information 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 hereby is accurate and complete in all material
respects and complies in all material respects with federal
securities and other laws and regulations applicable thereto.
(n) The Prospectus/Proxy Statement included in the
Registration Statement (only insofar as it relates to the
Acquiring Fund) does 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, in
light of the circumstances under which such statements were
made, not misleading.
(o) The Acquiring Fund agrees to use all reasonable
efforts to obtain the approvals and authorizations required by
the 1933 Act, the 1940 Act, and such of the 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 each will operate its business in the ordinary
course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include
customary dividends and distributions.
5.2 INVESTMENT REPRESENTATION. The Acquired Fund
covenants that the Acquiring Fund Shares to be issued hereunder
are not being acquired for the purpose of making any
distribution thereof other than 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 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 TAX-FREE REORGANIZATION. It is the intention of the
parties that the transaction contemplated by this Agreement with
respect to the Acquired Fund and the Acquiring Fund will qualify
as a reorganization within the meaning of Section 368(a) of the
Code. None of the parties to this Agreement shall take any
action or cause any action to be taken, including, without
limitation, the filing of any tax return, that is inconsistent
with such treatment or that results in the failure of the
transaction to qualify as a reorganization within the meaning of
Section 368(a) of the Code.
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 it hereunder on or before the
Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct 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, and the
Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by the Trust's
President or Vice President, in form and substance reasonably
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 complete 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 it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquired
Fund contained in this Agreement shall be true and correct 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, and the
Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by the Trust's
President or Vice President, in form and substance satisfactory
to the Acquiring Fund and dated as of the 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 an unaudited 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 Valuation Date, certified by the Treasurer or Assistant
Treasurer of the Trust.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE 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 On the Closing Date, the Commission shall not have
issued an unfavorable report under Section 25(b) of the 1940
Act, nor instituted any proceeding seeking to enjoin the
consummation of the transactions contemplated by this Agreement
under Section 25(c) of the 1940 Act and 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.
8.2 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 Blue Sky securities authorities, including any necessary
"no-action" positions of and exemptive orders from such federal
and state authorities) to permit consummation of the
transactions contemplated hereby 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 for itself waive any
of such conditions.
8.3 The Registration Statement shall have become effective
under the 1933 Act, and no stop orders suspending the
effectiveness of the Registration Statement shall have been
issued and, to the best knowledge of the parties hereto, no
investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the
0000 Xxx.
8.4 The Acquired Fund shall have declared 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 for all taxable periods ending on the Closing
Date (computed without regard to any deduction for dividends
paid), all of the Acquired Fund's net tax exempt income and all
of the net capital gains realized in all taxable periods ending
on the Closing Date (after reduction for any capital loss
carryforward).
8.5 Each of the Acquiring Fund and the Acquired Fund shall
have received a favorable opinion of Xxxxxx Xxxxxxxx LLP
substantially to the effect that, for federal income tax
purposes:
(a) The acquisition by the Acquiring Fund of all of
the assets of the Acquired Fund solely in exchange for the
Acquiring Fund's assumption of all of the liabilities of the
Acquired Fund and the issuance of the Acquiring Fund Shares,
followed by the distribution by the Acquired Fund in liquidation
of such Acquiring Fund Shares to the Acquired Fund Shareholders
in exchange for their Acquired Fund Shares, all as provided in
the Agreement, will constitute a reorganization within the
meaning of Section 368(a) of the IRS Code, and the Acquired Fund
and the Acquiring Fund each will be "a party to a
reorganization" within the meaning of Section 368(b) of the IRS
Code;
(b) Under IRS Code Section 361, no gain or loss will
be recognized by the Acquired Fund (i) upon the transfer of all
of its assets to the Acquiring Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund
of all of the liabilities of the Acquired Fund or (ii) upon the
distribution of the Acquiring Fund Shares by the Acquired Fund
to the Acquired Fund Shareholders in liquidation, as
contemplated in the Agreement
(c) Under IRS Code Section 1032, no gain or loss will
be recognized by the Acquiring Fund upon the receipt of all of
the assets of the Acquired Fund solely in exchange for the
assumption of the liabilities of the Acquired Fund and the
issuance of the Acquiring Fund Shares as contemplated in the
Agreement;
(d) Under IRS Code Section 362(b), the tax basis of
the assets of the Acquired Fund acquired by the Acquiring Fund
will be the same as the tax basis of such assets in the hands of
the Acquired Fund immediately prior to the Reorganization;
(e) Under IRS Code Section 1223(2), the holding
periods of the assets of the Acquired Fund in the hands of the
Acquiring Fund will include the periods during which such assets
were held by the Acquired Fund;
(f) Under IRS Code Section 354, no gain or loss will
be recognized by the Acquired Fund Shareholders upon the
exchange of all of their Acquired Fund Shares for the Acquiring
Fund Shares in the Reorganization;
(g) Under IRS Code Section 358, the aggregate tax
basis of the Acquiring Fund Shares to be received by each
Acquired Fund Shareholder pursuant to the Reorganization will be
the same as the aggregate tax basis of the Acquired Fund Shares
exchanged therefore;
(h) Under IRS Code Section 1223(1), an Acquired Fund
Shareholder's holding period for the Acquiring Fund Shares to be
received will include the period during which the Acquired Fund
Shares exchanged therefor were held, provided that the Acquired
Fund Shareholder held the Acquired Fund Shares as a capital
asset on the date of the Reorganization.
No opinion will be expressed as to (1) the effect of the
Reorganization on (A) the Acquired Fund or the Acquiring Fund
with respect to any asset as to which any unrealized gain or
loss is required to be recognized for U.S. 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,
(B) any Acquired Fund shareholder or Acquiring Fund shareholder
that is required to recognize unrealized gains and losses for
U.S. federal income tax purposes under a xxxx-to-market system
of accounting, or (C) the Acquired Fund or the Acquiring Fund
with respect to any stock held in a passive foreign investment
company as defined in Section 1297(a) of the Code or (2) any
other federal tax issues (except those set forth above) and all
state, local or foreign tax issues of any kind.
Such opinion shall be based on customary assumptions,
limitations and such representations as Xxxxxx Xxxxxxxx LLP may
reasonably request, and the Acquired Fund and Acquiring Fund
will cooperate to make and certify the accuracy of such
representations. Such opinion may contain such assumptions and
limitations as shall be in the opinion of such counsel
appropriate to render the opinions expressed therein.
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
9.1 Except as otherwise provided for herein, all expenses
of the transactions contemplated by this Agreement incurred by
the Acquired Fund and the Acquiring Fund, whether incurred
before or after the date of this Agreement, will be borne by the
Advisor, the investment advisor to the Funds. Such expenses
include, without limitation, (a) expenses incurred in connection
with the entering into and the carrying out of the provisions of
this Agreement; (b) expenses associated with the preparation and
filing of the Registration Statement under the 1933 Act covering
the Acquiring Fund Shares to be issued pursuant to the
provisions of this Agreement; (c) registration or qualification
fees and expenses of preparing and filing such forms as are
necessary under applicable state securities laws to qualify the
Acquiring Fund Shares to be issued in connection herewith in
each state in which the Acquired Fund Shareholders are residents
as of the date of the mailing of the Prospectus/Proxy Statement
to such shareholders; (d) postage; (e) printing; (f) accounting
fees; and (g) legal fees.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund agree that
neither party has made any representation, warranty or covenant
not set forth herein and that this Agreement constitutes the
entire agreement between the parties.
10.2 The representations, warranties, and covenants
contained in this Agreement or in any document delivered
pursuant hereto or in connection herewith shall not survive the
consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual
agreement of the Acquiring Fund and the Acquired Fund. In
addition, either the Acquiring Fund or the Acquired Fund may at
its option terminate this Agreement at or prior to the Closing
Date because:
(a) of a breach by the other of any representation,
warranty, or agreement contained herein to be performed at or
prior to the Closing Date, if not cured within 30 days; or
(b) a condition herein expressed to be precedent to
the obligations of the terminating party has not been met and it
reasonably appears that it will not or cannot be met.
11.2 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, the Trust, or
its Trustees or officers, to the other party, but the Advisor
shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement as provided in
paragraph 9.1.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or
supplemented in such manner as may be mutually agreed upon in
writing by the authorized officers of the Trust; provided,
however, that following the meeting of shareholders of 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 the Acquiring Fund Shares to be
issued to the Acquired Fund Shareholders under this Agreement to
the detriment of such Acquired Fund 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 Delaware, without
giving effect to the conflicts of laws provisions thereof.
13.4 This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns,
but 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 permitted assigns, any
rights or remedies under or by reason of this Agreement.
13.5 With respect to the Trust, the name used in this
Agreement refers respectively to the trust created and, as the
case may be, the Trustees, as trustees but not individually or
personally, acting under organizational documents Massachusetts,
which are referred to and are also on file at the principal
offices of the Funds. The obligations of the Funds entered into
in the name or on behalf thereof by any of the Trustees,
representatives or agents of the Funds, are made not
individually, but in such capacities, and are not binding upon
any of the Trustees, shareholders or representatives of the
Funds personally, but bind only the trust property, and all
persons dealing with the Acquired Fund and the Acquiring Fund
must look solely to the trust's property belonging to the
Acquired Fund and the Acquiring Fund for the enforcement of any
claims against the Acquired Fund and the Acquiring Fund,
respectively.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK
IN WITNESS WHEREOF, the dually authorized officers of the
Parties, including Touchstone Advisors, Inc., have signed and
delivered this Agreement as of the day and year first above
written.
TOUCHSTONE VARIABLE SERIES
TRUST, on behalf of each of
its separate series reflected
on Exhibit A
By: /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: SVP, CFO
For purposes of 9.1 only:
TOUCHSTONE ADVISORS, INC.
By: /s/ Xxxxxx Xxxxxxxxxx
Name: Xxxxxx Xxxxxxxxxx
Title: SVP, CFO
By: /s/ Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: President
EXHIBIT A
The following chart shows (i) each Acquired Fund and (ii)
the corresponding Acquiring Fund:
Acquired Fund, a series of Acquiring Fund, a series of
TOUCHSTONE VARIABLE SERIES TOUCHSTONE VARIABLE SERIES
TRUST TRUST
Touchstone Enhanced ETF Fund Touchstone Aggressive ETF Fund
