AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of ______, 201_, among Touchstone Ohio Tax-Free Bond
Fund (the "Successor Fund"), a series of Touchstone Strategic
Trust, a Massachusetts business trust (the "Successor Trust");
Touchstone Ohio Tax-Free Bond Fund (the "Predecessor Fund," and
collectively with the Successor Fund, the "Funds"), a series of
Touchstone Tax Free Trust, a Massachusetts business trust (the
"Predecessor Trust"); and Touchstone Advisors, Inc. (for
purposes of paragraph 9.1 only of this Agreement), the
investment advisor to each of the Funds ("Touchstone"). The
Successor Trust and the Predecessor Trust each have their
principal place of business at 000 Xxxxxxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxx 00000.
WHEREAS, the reorganization (the "Reorganization") will
consist of (i) the transfer of all the assets of the Predecessor
Fund to the Successor Fund in exchange solely for Class A,
Class C, Class Y, and Institutional Class voting shares of
beneficial interest, with [no] par value per share, of the
Successor Fund (the "Successor Fund Shares") and the assumption
by the Successor Fund of all the liabilities of the Predecessor
Fund; and (ii) the pro rata distribution of the Successor Fund
Shares to the shareholders of the Predecessor Fund in complete
liquidation and termination of the Predecessor Fund, all upon
the terms and conditions in this Agreement;
WHEREAS, the parties intend that this Agreement be a plan
of reorganization and that the Reorganization shall qualify as a
reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the
Treasury Regulations promulgated thereunder;
WHEREAS, the Predecessor Fund is a separate series of the
Predecessor Trust, the Successor Fund is a separate series of
the Successor Trust, and the Predecessor Trust and the Successor
Trust are each an open-end registered management investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"), and the Predecessor Fund owns securities that
generally are assets of the type and character in which the
Successor Fund is permitted to invest;
WHEREAS, the Predecessor Fund and the Successor Fund are
authorized to issue their shares of beneficial interest;
WHEREAS, the Board of Trustees of the Successor Trust,
including a majority of the Trustees who are not "interested
persons" of the Successor Trust, as defined in the 1940 Act, has
determined that the Reorganization will be in the best interests
of the Successor Fund;
WHEREAS, the Board of Trustees of the Predecessor Trust,
including a majority of the Trustees who are not "interested
persons" of the Predecessor Trust, as defined in the 1940 Act,
has determined that the Reorganization will be in the best
interests of the Predecessor Fund and its shareholders and that
the interests of the shareholders of the Predecessor 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 hereto
covenant and agree as follows:
ARTICLE I
TRANSFER OF ASSETS OF THE PREDECESSOR FUND IN EXCHANGE FOR
THE SUCCESSOR FUND SHARES AND ASSUMPTION OF PREDECESSOR FUND
LIABILITIES AND LIQUIDATION OF THE PREDECESSOR FUND
1.1 THE EXCHANGE. Subject to the terms and conditions of
this Agreement and on the basis of the representations and
warranties contained herein, the Predecessor Fund agrees to
transfer all of the Predecessor Fund's assets as set forth in
paragraph 1.2 to the Successor Fund. The Successor Fund agrees
in exchange for the Predecessor Fund's assets (i) to deliver to
the Predecessor Fund the number of Successor Fund Shares,
including fractional Successor Fund Shares, computed in the
manner and as of the time and date set forth in paragraph 2.3;
and (ii) to assume all of the liabilities of the Predecessor
Fund, as set forth in paragraph 1.3. Such transactions shall
take place at the Closing (as defined in paragraph 3.1 below).
1.2 ASSETS TO BE ACQUIRED. The assets of the Predecessor
Fund to be acquired by the Successor 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 Predecessor Fund and any
deferred or prepaid expenses shown as an asset on the books of
the Predecessor Fund as of the Closing.
The Predecessor Fund has provided the Successor Fund with
its most recent audited financial statements, which contain a
list of all of the Predecessor Fund's assets as of the date
thereof. The Predecessor 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
portfolio securities, purchases and redemptions of Predecessor
Fund shares, the payment of its normal operating expenses and
the distribution of its net income and net capital gain. The
Predecessor Fund reserves the right to buy and sell any
securities or other assets in accordance with its investment
objective and policies.
1.3 LIABILITIES TO BE ASSUMED. The Predecessor Fund will
endeavor to discharge all of its known liabilities and
obligations prior to the Valuation Time (as defined in
paragraph 2.1 below). The Successor Fund shall assume all of the
Predecessor Fund's liabilities and obligations of any kind
whatsoever, whether absolute, accrued, contingent or otherwise,
in existence as of the Closing.
1.4 LIQUIDATION AND DISTRIBUTION. Immediately after the
Closing, (a) the Predecessor Fund will completely liquidate and
distribute pro rata to the Predecessor Fund's shareholders of
record of each class, determined as of the time of such
distribution (the "Predecessor Fund Shareholders"), the Successor
Fund Shares of the corresponding class (as set forth in paragraph
2.3) received by the Predecessor Fund pursuant to paragraph 1.1;
and (b) the Predecessor Fund will proceed to terminate in
accordance with applicable laws of the Commonwealth of
Massachusetts as set forth in paragraph 1.8 below. Such
liquidation and distribution will be accomplished by the transfer
of the Successor Fund Shares then credited to the account of the
Predecessor Fund on the books of the Successor Fund to open
accounts on the share records of the Successor Fund in the names
of the Predecessor Fund Shareholders and representing the
respective pro rata number of Successor Fund Shares, by class,
due such shareholders. All issued and outstanding shares of the
Predecessor Fund will simultaneously be canceled on the books of
the Predecessor Fund and will be null and void. The Successor
Fund shall not issue certificates representing the Successor Fund
Shares in connection with such exchange, except for any global
certificate or certificates required by a securities depository
in connection with the establishment of book-entry ownership of
the shares. Successor Fund Shares distributed to Predecessor
Fund Shareholders will be reflected on the books of the Successor
Fund as uncertificated shares.
1.5 OWNERSHIP OF SHARES. Ownership of Successor Fund
Shares will be shown on the books of the Successor Fund's
transfer agent. Successor Fund Shares will be issued in the
manner described in the Prospectus/Information Statement on
Form N-14 (the "Prospectus/Information Statement"), which will be
distributed to shareholders of the Predecessor Fund as described
in paragraph 8.3.
1.6 TRANSFER TAXES. Any transfer taxes payable upon
issuance of Successor Fund Shares in a name other than the
registered holder of the Predecessor Fund shares on the books of
the Predecessor Fund as of that time shall, as a condition of
such issuance and transfer, be paid by the person to whom such
Successor Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility
of the Predecessor Fund is and shall remain the responsibility of
the Predecessor Fund up to and including the Closing Date and
such later date on which the Predecessor Fund is terminated.
1.8 TERMINATION. The Predecessor Trust shall take all
necessary and appropriate steps under applicable law to terminate
the Predecessor Fund promptly following the Closing and the
making of all distributions pursuant to paragraph 1.4, but in no
event later than 12 months following the Closing Date.
1.9 INITIAL SHARES. Prior to the Closing, the Successor
Fund will issue one [Class A, Class C and Class Y] share of
beneficial interest of the Successor Fund (the "Initial Shares")
to Touchstone or one of its affiliates (the "Sole Shareholder")
in exchange for $1.00 per share for the sole purpose of allowing
the Sole Shareholder to approve certain matters to facilitate the
organization of the Successor Fund. The Initial Shares shall be
redeemed and cancelled by the Successor Fund in exchange for
$1.00 per share prior to the Closing.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Predecessor
Fund's net assets shall be the value of the assets of the
Predecessor Fund to be acquired by the Successor Fund less the
amount of the Predecessor Fund's liabilities to be assumed by the
Successor Fund as of the close of business on the New York Stock
Exchange on the Closing Date (the "Valuation Time"), using the
valuation procedures set forth in the Predecessor Trust's
[Restated Agreement and Declaration of Trust, as amended from
time to time] (the "Predecessor Trust's Declaration of Trust")
and the Predecessor Fund's then current prospectus and statement
of additional information or such other valuation procedures as
shall be mutually agreed upon by the Funds.
2.2 VALUATION OF SHARES. The net asset value per share of
each class of the Successor Fund shall be the net asset value per
share of such class of the Predecessor Fund computed as of the
Valuation Time, using the valuation procedures set forth in the
Predecessor Trust's Declaration of Trust and the Predecessor
Fund's then current prospectus and statement of additional
information or such other valuation procedures as shall be
mutually agreed upon by the Funds.
2.3 SHARES TO BE ISSUED. The number of full and fractional
Successor Fund Shares to be issued in exchange for the
Predecessor Fund's net assets shall be determined with respect to
each class by dividing (a) the net assets of such class of the
Predecessor Fund, determined in accordance with paragraph 2.1, by
(b) the net asset value per share of the corresponding class of
the Successor Fund (as set forth in the following sentence),
determined in accordance with paragraph 2.2. [Shareholders of
record of Class A Shares of the Predecessor Fund at the Closing
shall be credited with full and fractional Class A Shares of the
Successor Fund. Shareholders of record of Class C Shares of the
Predecessor Fund at the Closing shall be credited with full and
fractional Class C Shares of the Successor Fund. Shareholders of
record of Class Y Shares of the Predecessor Fund at the Closing
shall be credited with full and fractional Class Y Shares of the
Successor Fund. Shareholders of record of Institutional Class
Shares of the Predecessor Fund at the Closing shall be credited
with full and fractional Class Y Shares of the Successor Fund.]
2.4 DETERMINATION OF VALUE. All computations of value
shall be made by BNY Mellon Investment Servicing (US) Inc., the
Successor Fund's and the Predecessor Fund's accounting agent, in
accordance with its regular practice in pricing the shares and
assets of the Predecessor Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing of the Reorganization (the
"Closing") shall take place on _____, 201_, or such other date as
the Funds may agree (the "Closing Date"). All acts taking place
at the Closing shall be deemed to take place simultaneously as of
5:00 p.m. Eastern Time on the Closing Date unless otherwise
provided. The Closing shall be held as of 5:00 p.m. Eastern Time
at the offices of the [Successor Trust], or at such other time or
place as the Funds may agree.
3.2 EFFECT OF SUSPENSION IN TRADING. In the event that on
the Closing Date (a) the New York Stock Exchange or another
primary trading market for portfolio securities of the Successor
Fund or the Predecessor 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 Successor Fund or the Predecessor Fund is
impracticable, the Closing Date shall be postponed until the
first business day on which trading shall have been fully resumed
and reporting shall have been restored or such other date as the
Funds may agree.
3.3 TRANSFER AGENT'S CERTIFICATE. The Predecessor Fund
shall cause its transfer agent to deliver to the Successor Fund
at the Closing a certificate of an authorized officer stating
that its records contain the names and addresses of the
Predecessor Fund Shareholders and the number, class and
percentage ownership of outstanding shares owned by each such
shareholder as of the Closing. At the Closing, the Successor
Fund shall cause its transfer agent to issue and deliver to the
Secretary of the Predecessor Trust a confirmation evidencing the
Successor Fund Shares to be credited on the Closing Date or
otherwise provide evidence satisfactory to the Predecessor Fund
that such Successor Fund Shares have been credited to the
Predecessor Fund's account on the books of the Successor Fund.
At the Closing, each Fund shall deliver to the other such bills
of sale, checks, assignments, share certificates, if any,
receipts and other documents as such other Fund or its counsel
may reasonably request.
3.4 CUSTODIAN'S CERTIFICATE. At the Closing or as soon as
practicable thereafter, the Predecessor Fund shall cause its
custodian to deliver to the Successor Fund a certificate of an
authorized officer stating that: (a) the Predecessor Fund's
portfolio securities, cash and any other assets have been
delivered in proper form to the Successor Fund as of the final
settlement date for such transfers; and (b) all necessary taxes,
including all applicable federal and state stock transfer stamps,
if any, have been paid, or provision for payment shall have been
made, in conjunction with the delivery of such portfolio
securities, cash and any other assets by the Predecessor Fund.
At the Closing or as soon as practicable thereafter, the
Successor Fund shall cause its custodian to deliver to the
Predecessor Fund a certificate of an authorized officer
acknowledging that the Successor Fund has received the
Predecessor Fund's portfolio securities, cash and any other
assets as of the final settlement date for such transfers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE PREDECESSOR FUND. The
Predecessor Trust, on behalf of the Predecessor Fund, represents
and warrants to the Successor Fund as follows:
(a) The Predecessor Fund is a separate investment
series of the Predecessor Trust, a business trust duly
organized, validly existing and in good standing under the laws
of Massachusetts.
(b) The Predecessor Fund is a separate investment
series of the Predecessor 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 Predecessor Fund conform in all
material respects to the applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), the 1940
Act and the rules and regulations of the Commission under such
Acts 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 Predecessor Fund is not, and the execution,
delivery and performance of this Agreement will not result, in
violation of any provision of the Predecessor Trust's
Declaration of Trust or the By-Laws of the Predecessor Trust (as
amended from time to time) or of any material agreement,
indenture, instrument, contract, lease or other undertaking to
which the Predecessor Fund is a party or by which it is bound.
(e) The Predecessor Fund has no material contracts or
other commitments (other than this Agreement) that will be
terminated with liability to it on or prior to the Closing,
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 Successor Fund, no litigation, administrative
proceeding or investigation of or before any court or
governmental body is currently pending or to the Predecessor
Fund's knowledge threatened against the Predecessor 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 its ability to carry out the
Reorganization. The Predecessor Fund knows of no facts that
might form the basis for the institution of any 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 is
reasonably likely to materially and adversely affect its
business or its ability to consummate the Reorganization or the
transactions contemplated herein.
(g) The audited financial statements of the
Predecessor Fund as of ____, 201_ and for the fiscal year then
ended have been prepared in accordance with generally accepted
accounting principles in the United States of America
consistently applied, and such statements (copies of which have
been furnished to the Successor Fund) fairly reflect the
financial condition of the Predecessor Fund as of such date, and
there are no known contingent liabilities of the Predecessor
Fund as of such date not disclosed therein.
(h) The financial statements of the Predecessor Fund
as of ____, 201_ and for the six-month period then ended have
been prepared in accordance with generally accepted accounting
principles in the United States of America consistently applied,
and such statements (copies of which have been furnished to the
Successor Fund) fairly reflect the financial condition of the
Predecessor Fund as of such date, and there are no known
contingent liabilities of the Predecessor Fund as of such date
not disclosed therein.
(i) Since the date of the financial statements
referred to in subparagraph (h) above, there has not been any
material adverse change in the Predecessor Fund's financial
condition, assets, liabilities or business other than changes
occurring in the ordinary course of business, or any incurrence
by the Predecessor Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as
otherwise disclosed to and accepted by the Successor Fund. For
the purposes of this subparagraph (i), a decline in the net
asset value of the Predecessor Fund shall not constitute a
material adverse change.
(j) All federal, state, local and other tax returns
and reports of the Predecessor Fund required by law to be filed
by it (taking into account permitted extensions for filing) have
been timely filed and are complete and correct in all material
respects. All federal, state, local and other taxes of the
Predecessor Fund required to be paid (whether or not shown as
due on any such return or report) have been paid, or provision
shall have been made for the payment thereof, and any such
unpaid taxes as of the dates of the financial statements
referred to above are properly reflected on such financial
statements. To the Predecessor Fund's knowledge, no tax
authority is currently auditing or preparing to audit the
Predecessor Fund, and no assessment or deficiency for taxes,
interest, additions to tax or penalties has been asserted
against the Predecessor Fund.
(k) For each taxable year of its operations, the
Predecessor Fund (i) has elected to qualify, and has qualified
or will qualify (in the case of the taxable year that includes
the Closing Date for that portion of such taxable year ending
with the Closing Date), as a "regulated investment company"
under the Code (a "RIC"), (ii) has been eligible to and has
computed its federal income tax under Section 852 of the Code,
and (iii) has been, and will be as of the Closing Date treated
as a separate corporation for federal income tax purposes
pursuant to Section 851(g) of the Code. The Predecessor Fund
will qualify as a RIC as of the Closing Date and will have
satisfied as of the close of its most recent prior quarter of
its taxable year, the diversification requirements of
Section 851(b)(3) of the Code without regard to the last
sentence of Section 851(d)(1) of the Code. The Predecessor Fund
has not taken any action, caused any action to be taken or
caused any action to fail to be taken which action or failure
could cause the Predecessor Fund to fail to qualify as a RIC
under the Code. The Predecessor Fund has no earnings and
profits accumulated in any taxable year in which the provisions
of Subchapter M of the Code did not apply to it.
(l) The Predecessor 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.
(m) All issued and outstanding shares of the
Predecessor Fund are, and as of the Closing will be, duly and
validly issued and outstanding, fully paid and non-assessable by
the Predecessor Fund. All of the issued and outstanding shares
of the Predecessor Fund will, as of the Closing, 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 Predecessor
Fund does not have outstanding any options, warrants or other
rights to subscribe for or purchase any Predecessor Fund shares,
nor is there outstanding any security convertible into any
Predecessor Fund shares.
(n) At the Closing, the Predecessor Fund will have
good and marketable title to the Predecessor Fund's assets to be
transferred to the Successor 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 Successor 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 Successor Fund and
accepted by the Successor Fund.
(o) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on
the part of the Predecessor Trust's Board of Trustees, and this
Agreement constitutes a valid and legally binding obligation of
the Predecessor 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.
(p) The information furnished by the Predecessor Fund
for use in "no-action" letters, applications for orders,
registration statements, information 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.
(q) The Predecessor Fund has provided the Successor
Fund with information reasonably necessary for the preparation
of the Prospectus/Information Statement, all of which has been
included in a Registration Statement on Form N-14 of the
Successor 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 Reorganization. The Prospectus/Information Statement
included in the Registration Statement (other than information
that relates to the Successor Fund and any other fund described
other than the Predecessor 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 SUCCESSOR FUND. The Successor
Trust, on behalf of the Successor Fund, represents and warrants
to the Predecessor Fund as follows:
(a) The Successor Fund is a separate investment
series of the Successor Trust, a business trust duly organized,
validly existing and in good standing under the laws of
Massachusetts.
(b) The Successor Fund is a separate investment
series of the Successor 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 Successor Fund was formed solely for the
purpose of effecting the Reorganization. The Successor has not
commenced operations or engaged in any business activity, other
than such activities as are necessary for the organization of a
new series of an investment company prior to its commencement of
operations. Except with respect to the consideration received
in exchange for the issuance of the Initial Shares, the
Successor Fund has not owned any assets and will not own any
assets prior to the Closing. There shall be no issued and
outstanding shares of the Successor Fund prior to the Closing
Date other than the Initial Shares issued to the Sole
Shareholder in association with the organization of the
Successor Fund. The Successor Fund will redeem and cancel such
Initial Shares prior to the Closing in exchange for an amount
equal to the consideration received by the Successor Fund for
such Initial Shares so that the Successor Fund will own no
assets at the time of the Closing.
(d) [The current prospectus and statement of
additional information of the Successor Fund, as of the date of
the Prospectus/Information Statement, conform in all material
respects to the applicable requirements of the 1933 Act, the
1940 Act and the rules and regulations of the Commission under
such Acts 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.]
(e) The Successor Fund is not, and the execution,
delivery and performance of this Agreement will not result, in
violation of any provision of the [Successor Trust's Declaration
of Trust or By-Laws] or of any material agreement, indenture,
instrument, contract, lease or other undertaking to which the
Successor Fund is a party or by which it is bound.
(f) Except as otherwise disclosed in writing to the
Predecessor Fund and accepted by the Predecessor Fund, no
litigation, administrative proceeding or investigation of or
before any court or governmental body is currently pending or to
the Successor Fund's knowledge threatened against the Successor
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 its ability to carry
out the Reorganization. The Successor Fund knows of no facts
that might form the basis for the institution of any 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 is reasonably likely to materially and adversely
affect its business or its ability to consummate the
Reorganization or the transactions contemplated herein.
(g) The Successor Fund (i) will elect to be taxed as
a RIC, will qualify for the tax treatment afforded RICs under
the Code for its taxable year that includes the Closing Date,
and intends to continue to qualify for such treatment for its
subsequent taxable years, (ii) will be eligible to compute its
federal income tax under Section 852 of the Code for the taxable
year that includes the Closing Date, and (iii) will be treated
as a separate corporation for federal income tax purposes
pursuant to Section 851(g) of the Code for the taxable year that
includes the Closing Date. The Successor Fund has not taken any
action, caused any action to be taken or caused any action to
fail to be taken which action or failure could cause the
Successor Fund to fail to qualify as a RIC for its taxable year
that includes the Closing Date. The Successor Fund has no
earnings and profits accumulated in any taxable year.
(h) The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on
the part of the Successor Trust's Board of Trustees, and this
Agreement constitutes a valid and legally binding obligation of
the Successor 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.
(i) The Successor Fund Shares to be issued and
delivered to the Predecessor Fund, for the account of the
Predecessor Fund Shareholders, pursuant to the terms of this
Agreement will, at the Closing, have been duly authorized and
will, after taking into account the redemption and cancellation
of the Initial Shares, constitute all of the issued and
outstanding shares of the Successor Fund as of immediately after
the Closing. When so issued and delivered, such shares will be
duly and validly issued shares of the Successor Fund and will be
fully paid and non-assessable by the Successor Fund. The
Successor Fund has no outstanding options, warrants or other
rights to subscribe for or purchase any shares of the Successor
Fund, and has no outstanding securities convertible into shares
of the Successor Fund.
(j) The information furnished by the Successor Fund
for use in "no-action" letters, applications for orders,
registration statements, information 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.
(k) The Prospectus/Information Statement included in
the Registration Statement 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 (except with respect to such information that relates
to the Predecessor Fund that has been provided by the
Predecessor Fund pursuant to paragraph 4.1(q)).
(l) The Successor 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 SUCCESSOR FUND AND THE PREDECESSOR FUND
5.1 OPERATION IN ORDINARY COURSE. The Predecessor Fund
will operate its business in the ordinary course between the date
of this Agreement and the Closing, it being understood that such
ordinary course of business will include purchases and
redemptions of shares, customary dividends and distributions and
any other distributions necessary or desirable to avoid federal
income or excise taxes.
5.2 INVESTMENT REPRESENTATION. The Predecessor Fund
covenants that the Successor 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 Predecessor Fund will
assist the Successor Fund in obtaining such information as the
Successor Fund reasonably requests concerning the beneficial
ownership of the Predecessor Fund shares.
5.4 FURTHER ACTION. Subject to the provisions of this
Agreement, the Successor Fund and the Predecessor 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 STATEMENT OF EARNINGS AND PROFITS. As promptly as
practicable, but in any case within (sixty) 60 days after the
Closing Date, the Predecessor Trust shall furnish the Successor
Fund, in such form as is reasonably satisfactory to the Successor
Fund and which will be certified by the Predecessor Trust's
Treasurer, a statement of the earnings and profits of the
Predecessor Fund for federal income tax purposes, as well as any
net operating loss carryovers and capital loss carryovers, that
will be carried over to the Successor Fund as a result of
Section 381 of the Code.
5.6 TAX STATUS OF REORGANIZATION. It is the intention of
the Funds that the transaction contemplated by this Agreement
with respect to the Predecessor Fund and the Successor Fund will
qualify as a reorganization within the meaning of Section 368(a)
of the Code. Except as otherwise expressly provided in this
Agreement, none of the Predecessor Trust, the Predecessor Fund
the Successor Trust or the Successor 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
Code. At or prior to the Closing, the parties to this Agreement
will take such reasonable action, or cause such action to be
taken, as is reasonably necessary to enable Xxxxxx Price P.C. to
render the tax opinion contemplated by paragraph 8.5.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PREDECESSOR FUND
The obligations of the Predecessor Fund to consummate the
Reorganization shall be subject, at its election, to the
performance by the Successor Fund of all of the obligations to
be performed by it at or before the Closing, and, in addition,
the following further condition:
6.1 All representations and warranties of the Successor
Fund contained in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing with the same
force and effect as if made at and as of the Closing. The
Successor Fund shall have delivered to the Predecessor Fund at
the Closing a certificate executed in its name by the Successor
Trust's President or Vice President, in form and substance
reasonably satisfactory to the Predecessor Fund and dated as of
the Closing Date, to such effect and as to such other matters as
the Predecessor Fund shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SUCCESSOR FUND
The obligations of the Successor Fund to complete the
Reorganization shall be subject, at its election, to the
performance by the Predecessor Fund of all of the obligations to
be performed by it at or before the Closing and, in addition,
the following conditions:
7.1 All representations and warranties of the Predecessor
Fund contained in this Agreement shall be true and correct as of
the date of this Agreement and as of the Closing with the same
force and effect as if made at and as of the Closing. The
Predecessor Fund shall have delivered to the Successor Fund at
the Closing a certificate executed in its name by the Predecessor
Trust's President or Vice President, in form and substance
satisfactory to the Successor Fund and dated as of the Closing
Date, to such effect and as to such other matters as the
Successor Fund shall reasonably request.
7.2 The Predecessor Fund shall have delivered to the
Successor Fund a statement of the Predecessor Fund's assets and
liabilities, together with a list of the Predecessor Fund's
portfolio securities showing the tax basis of such securities by
lot and the holding periods of such securities, as of the
Closing, certified by the Treasurer or Assistant Treasurer of the
Predecessor Trust.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE PREDECESSOR FUND
If any of the conditions set forth below in this
Article VIII have not been satisfied at or before the Closing
with respect to the Predecessor Fund or the Successor Fund, the
other Fund 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 pending or threatened 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
Successor Fund or the Predecessor 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, no stop order 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 1933 Act. The Predecessor Fund and the
Successor Fund shall have distributed, or caused to be
distributed, copies of the Prospectus/Information Statement to
Predecessor Fund shareholders of record as and in the manner
required by the 1933 Act, the 1934 Act and the 0000 Xxx.
8.4 If and to the extent the Predecessor Trust's Board of
Trustees deems it advisable for federal income tax purposes, the
Predecessor Fund shall have declared and paid prior to the
Valuation Time a dividend or dividends which, together with all
previous such dividends, shall have the effect of distributing to
the Predecessor Fund's shareholders at least (i) all of the
Predecessor Fund's investment company taxable income (within the
meaning of Section 852(b)(2) of the Code) for all taxable years
or periods ending on or before the Closing Date (computed without
regard to any deduction for dividends paid); (ii) the excess of
the Predecessor Fund's interest income excludable from gross
income under Section 103(a) of the Code over its disallowed
deductions under Sections 265 and 171(a)(2) of the Code for all
taxable years or periods ending on or before the Closing Date;
and (iii) all of the Predecessor Fund's net capital gain (as
defined in Section 1222(11) of the Code) realized in all taxable
years or periods ending on or before the Closing Date (after
reduction for any available capital loss carryforward).
8.5 Each of the Successor Fund and the Predecessor Fund
shall have received an opinion of Xxxxxx Price P.C. substantially
to the effect that, for federal income tax purposes:
(a) The transfer by the Predecessor Fund of all its
assets to the Successor Fund solely in exchange for Successor
Fund Shares and the assumption by the Successor Fund of all the
liabilities of the Predecessor Fund, immediately followed by the
pro rata, by class, distribution of all the Successor Fund
Shares so received by the Predecessor Fund to the Predecessor
Fund's shareholders of record in complete liquidation of the
Predecessor Fund and the termination of the Predecessor Fund as
soon as practicable thereafter, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the
Code, and the Successor Fund and the Predecessor Fund will each
be "a party to a reorganization," within the meaning of
Section 368(b) of the Code, with respect to the Reorganization.
(b) No gain or loss will be recognized by the
Successor Fund upon the receipt of all the assets of the
Predecessor Fund solely in exchange for Successor Fund Shares
and the assumption by the Successor Fund of all the liabilities
of the Predecessor Fund.
(c) No gain or loss will be recognized by the
Predecessor Fund upon the transfer of all its assets to the
Successor Fund solely in exchange for Successor Fund Shares and
the assumption by the Successor Fund of all the liabilities of
the Predecessor Fund or upon the distribution (whether actual or
constructive) of the Successor Fund Shares so received to the
Predecessor Fund's shareholders solely in exchange for such
shareholders' shares of the Predecessor Fund in complete
liquidation of the Predecessor Fund.
(d) No gain or loss will be recognized by the
Predecessor Fund's shareholders upon the exchange, pursuant to
this Agreement, of all their shares of the Predecessor Fund
solely for Successor Fund Shares.
(e) The aggregate basis of the Successor Fund Shares
received by each Predecessor Fund Shareholder pursuant to the
Reorganization will be the same as the aggregate basis of the
Predecessor Fund shares exchanged therefor by such shareholder.
(f) The holding period of the Successor Fund Shares
received by each Predecessor Fund Shareholder in the
Reorganization will include the period during which the shares
of the Predecessor Fund exchanged therefor were held by such
shareholder, provided such Predecessor Fund shares were held as
capital assets at the effective time of the Reorganization.
(g) The basis of the assets of the Predecessor Fund
received by the Successor Fund will be the same as the basis of
such assets in the hands of the Predecessor Fund immediately
before the effective time of the Reorganization.
(h) The holding period of the assets of the
Predecessor Fund received by the Successor Fund will include the
period during which such assets were held by the Predecessor
Fund.
No opinion will be expressed as to (1) the effect of the
Reorganization on the Predecessor Fund, the Successor Fund or
any Predecessor Fund Shareholder with respect to any asset
(including without limitation any stock held in a passive
foreign investment company as defined in Section 1297(a) of the
Code) as to which any unrealized gain or loss is required to be
recognized for federal income tax purposes (i) at the end of a
taxable year or upon the termination thereof, or (ii) upon the
transfer of such asset regardless of whether such transfer would
otherwise be a non-taxable transaction under 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 and
limitations and such representations as Xxxxxx Price P.C. may
reasonably request. The Predecessor Fund and Successor 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 Successor Fund nor
the Predecessor 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 Predecessor Fund and the Successor
Fund, whether incurred on, before or after the date of this
Agreement, will be borne by Touchstone. 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 Successor 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 Successor
Fund Shares to be issued in each state in which the Predecessor
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; and (g) legal
fees.
9.2 Notwithstanding the foregoing, expenses will in any
event be paid by the party directly incurring such expenses if
and to the extent that the payment by another party of such
expenses would result in the disqualification of the Predecessor
Fund or the Successor Fund, as the case may be, as a RIC.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Successor Fund and the Predecessor 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 Funds.
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 Successor Fund and the Predecessor Fund. In
addition, either the Successor Fund or the Predecessor Fund may
at its option terminate this Agreement at or prior to the Closing
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, 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 Successor Fund, the Predecessor Fund, the Successor
Trust, the Predecessor Trust, Touchstone or their respective
board members or officers to any party to this Agreement, but
Touchstone 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 Predecessor Trust and the Successor
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 [Commonwealth of Massachusetts],
without giving effect to the conflicts of laws provisions of that
state; provided, that, in the case of any conflict between those
laws and the federal securities laws, the latter shall govern.
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 of any rights or obligations under
this Agreement shall be made by any party without the written
consent of the other parties. Nothing in this Agreement
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 names used in this
Agreement refer respectively to the Trust and the Funds and, as
the case may be, the Trustees, as trustees but not individually
or personally, acting in the case of the Trust under
organizational documents that have been filed in Massachusetts
and are also on file at the principal office of the Trust. The
obligations of the 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 the
applicable Fund, and all persons dealing with the Predecessor
Fund or the Successor Fund must look solely to property belonging
to the Predecessor Fund or the Successor Fund, as the case may
be, for the enforcement of any claims against the Predecessor
Fund or the Successor Fund, respectively.]
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement, all as of the date first written above.
TOUCHSTONE TAX FREE TRUST,
on behalf of Touchstone Ohio Tax-
Free Bond Fund
By:
Name:
Title:
TOUCHSTONE STRATEGIC TRUST,
on behalf of Touchstone Ohio Tax-
Free Bond Fund
By:
Name:
Title:
For purposes of paragraph 9.1 only:
TOUCHSTONE ADVISORS, INC.
By:
Name:
Title:
By:
Name:
Title:
