AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement") is made as of May 24, 2013, between the
Touchstone Small Cap Growth Fund (the "Acquiring Fund") and
the Touchstone Diversified Small Cap Growth Fund (the
"Acquired Fund"), each a series of the Touchstone Strategic
Trust (the "Trust"). The Trust is a Massachusetts business
trust, with its principal place of business at 000 Xxxxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxx 00000.
The reorganization (the "Reorganization") will consist of
(i) the transfer of all of the assets of the Acquired Fund in
exchange solely for shares of beneficial interest, without par
value, of the Acquiring Fund (the "Acquiring Fund Shares");
(ii) the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund; and (iii) the distribution,
after the Closing Date defined below, of the Acquiring Fund
Shares to the shareholders of the Acquired Fund in liquidation
of the Acquired Fund, all upon the terms and conditions 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 Acquired Fund and the Acquiring Fund are
each a separate investment series of an open-end, registered
investment company of the management type and the Acquired
Fund owns securities that generally are assets of the type and
character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquired Fund and the Acquiring Fund are
authorized to issue their 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 ("Independent Trustees"), as
defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), 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 in
value as a result of the Reorganization;
WHEREAS, the Board of the Trust, 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 shareholders of the Acquired Fund will not be
diluted in value as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of
the covenants and agreements in this Agreement, the parties
covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING 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 the number of Acquiring Fund
Shares, including fractional Acquiring Fund Shares, computed
in the manner and as of the time and date set forth in
paragraphs 2.2 and 2.3; 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 audited financial statements, which contain a
list of all of the Acquired Fund's assets as of the date
thereof. The Acquired Fund 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 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, determined as of the close of business on the
Valuation Date (the "Acquired Fund Shareholders"), the
Acquiring Fund Shares received by the Acquired Fund pursuant
to paragraph 1.1; and (b) the Acquired Fund will 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/Information
Statement on Form N-14 (the "Prospectus/Information
Statement"), which has been distributed to shareholders of the
Acquired Fund as described in paragraph 4.1(p).
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 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired
Fund's assets to be acquired by the Acquiring Fund 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 (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 multiplying
the outstanding shares of the Acquired Fund by the ratio
computed 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.
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 August 24, 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. EST 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 business trust duly organized, validly
existing, and in good standing under the laws of
Massachusetts.
(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 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, 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 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.
(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 Reorganization. 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 Reorganization.
(g) The audited financial statements of the
Acquired Fund dated March 31, 2013 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 March 31, 2013, 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
their payment. 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 IRS 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, subject to no restrictions
on the full transfer, 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 Reorganization is
accurate and complete in all material respects and complies in
all material respects with applicable federal securities and
other laws and regulations.
(p) The Acquired Fund has provided the Acquiring
Fund with information reasonably necessary for the preparation
of the Prospectus/Information 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 the
Reorganization. The Prospectus/Information Statement included
in the Registration Statement (other than information that
relates to the Acquiring Fund and any other fund described
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 or necessary to make the statements, 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/Information 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 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, 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 Reorganization. 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
Reorganization.
(f) The audited financial statements of the
Acquiring Fund dated March 31, 2013 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 March 31, 2013, 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
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.
(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 Reorganization is
accurate and complete in all material respects and complies in
all material respects with applicable federal securities and
other laws and regulations.
(n) The Prospectus/Information Statement included
in the Registration Statement (only 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 or necessary to make the statements, 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 SELLING 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 of this Agreement 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 are
not being acquired for the purpose of making any distribution
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 Reorganization, 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 will qualify as a
reorganization within the meaning of Section 368(a)(1)(C) of
the IRS Code. Except as otherwise expressly provided in this
Agreement, neither the Trust, the Acquired Fund, nor the
Acquiring Fund 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 results in
the failure of the transaction to qualify as a reorganization
within the meaning of Section 368(a) of the IRS Code. At or
prior to the Closing Date, the parties to this Agreement will
take such reasonable action, or cause such action to be taken,
as is reasonably necessary to enable Xxxxxx Xxxxxxxx LLP to
render the tax opinion contemplated in this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Acquired Fund to consummate the
Reorganization shall be subject, at its election, to the
performance by the Acquiring Fund of all the obligations to be
performed by it on or before the Closing Date, and, in
addition, 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 of this Agreement 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 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
Reorganization shall be subject, at its election, to the
performance by the Acquired Fund of all the obligations to be
performed by it on or before the Closing Date and, in
addition, 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 of this Agreement and as of the Closing Date with
the same force and effect as if made on and as of the Closing
Date. 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 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 or Assistant
Treasurer of the Trust.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING 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
Reorganization: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 Reorganization.
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 Reorganization 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 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, 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's
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) 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 certain 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 its assets to the Acquiring Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund
of certain 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
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's shares exchanged were held, provided that the
Acquired Fund's 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 and (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 IRS 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. 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. 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, all expenses of the
Reorganization incurred by the Acquired Fund and the Acquiring
Fund, whether incurred before or after the date of this
Agreement, will be borne by Touchstone Advisors, Inc., the
investment advisor to the Trust. 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 each
state in which the Acquired Fund Shareholders are residents as
of the date of the mailing of the Prospectus/Information
Statement to such shareholders; (d) postage; (e) printing; (f)
accounting fees; (g) legal fees; and (h) solicitation costs of
the transaction.
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 in this Agreement 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 to or in connection with this Agreement shall not
survive the consummation of the Reorganization.
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 in this
Agreement to be performed at or prior to the Closing Date, if
not cured within 30 days; or
(b) a condition in this Agreement 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 Touchstone Advisors, Inc. 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.
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 Massachusetts,
without giving effect to the conflicts of laws provisions of
that state.
13.4 This Agreement shall bind and inure to the benefit
of the parties and their respective successors and assigns,
but no assignment, transfer, or any rights or obligations of
this Agreement shall be made by any party without the written
consent of the other party. Nothing in hits Agreement
expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other
than the parties 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 names used in this
Agreement refer respectively to the series subject to the
Reorganization and, as the case may be, the Trustees, as
trustees but not individually or personally, acting under
organizational documents filed in Massachusetts, which are
referred to and are also on file at the principal offices of
the Trust. The obligations of Trust entered into in the name
or on behalf of any of the Trustees, representatives, or
agents of the Trust, are made not individually, but in such
capacities, and are not binding upon any of the Trustees,
shareholders, or representatives of the Trust personally, but
bind only the property of each series, as applicable, and all
persons dealing with the Acquired Fund and the Acquiring Fund
must look solely to 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.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement, all as of the date first written above.
TOUCHSTONE STRATEGIC TRUST
ON BEHALF OF THE TOUCHSTONE
DIVERSIFIED SMALL CAP GROWTH
FUND
By:
Name: Xxxx X. XxXxxxxx
Title: President
TOUCHSTONE STRATEGIC TRUST
ON BEHALF OF THE TOUCHSTONE
SMALL CAP GROWTH FUND
By:
Name: Xxxx X. XxXxxxxx
Title: President
EXHIBIT A
The following chart shows (i) each Acquired Fund and its classes of shares
and
(ii) the corresponding Acquiring Fund and its classes of shares:
Acquired Fund, a series of TOUCHSTONE STRATEGIC
TRUST, and its Classes of Shares
Acquiring Fund, a series of TOUCHSTONE
STRATEGIC TRUST, and its Class of Shares
Touchstone Diversified Small Cap Growth
Fund
Touchstone Small Cap Growth Fund
Class A
Class A
Class C
Class C
Class Y
Class Y
