i-COMPLIANCE SERVICES AGREEMENT
AGREEMENT dated as of October 5, 2004 among Touchstone Strategic Trust,
Touchstone Investment Trust and Touchstone Tax-Free Trust (each a "Trust," and
collectively, the "Trusts"), each a Massachusetts business trust and Integrated
Fund Services, Inc. ("Integrated"), an Ohio corporation.
WHEREAS, the Trusts are each management investment companies registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, shares of beneficial interest in the Trusts are divided into
separate series (each, along with any series which may in the future be
established, a "Fund," collectively, the "Funds"); and
WHEREAS, the Trusts wish to employ Integrated to provide certain
compliance services on behalf of the Trusts; and
WHEREAS, Integrated wishes to provide such services to the Trusts under
the conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trusts and Integrated agree as follows:
1. APPOINTMENT
The Trusts hereby employ Integrated to perform those
compliance services described in this Agreement and the Exhibits attached hereto
for the Trusts. Integrated shall act under such appointment and perform the
obligations thereof in accordance with the Trusts' current registration
statements and as required by applicable federal laws and regulations upon the
terms and conditions hereinafter set forth. The appointment shall begin at a
time mutually agreed upon by the parties.
2. COMPLIANCE SERVICES
Subject to the direction and control of the Trustees of the
Trusts, Integrated shall perform the compliance services for the Trusts detailed
in Exhibits A-B. Integrated shall perform such other services for the Trusts and
the Funds that are mutually agreed upon by the parties from time to time, for
which the Trusts will pay Integrated the amounts agreed upon between them.
3. ASSUMPTIONS
The Trusts are ultimately responsible for each Fund's
compliance program and its compliance with applicable federal securities laws,
including Rule 38a-1 under the 1940 Act. In addition, the management of each
Fund and the management of the Funds' service providers are responsible for
implementation and execution of their compliance programs.
4. CONFIDENTIALITY
A. Without the prior consent of the other party, no party
shall disclose Confidential Information (as defined below) of any other party
received in connection with the services provided under this Agreement. The
receiving party shall use the same degree of care as it uses to protect its own
confidential information of like nature, but no less than a reasonable degree of
care, to maintain in confidence the confidential information of the disclosing
party. The foregoing provisions shall not apply to any information that (i) is,
at the time of disclosure, or thereafter becomes, part of the public domain
through a source other than the receiving party, (ii) is subsequently learned
from a third party that, to the knowledge of the receiving party, is not under
an obligation of confidentiality to the disclosing party, (iii) was known to the
receiving party at the time of disclosure, or (iv) is generated independently by
the receiving party, or (v) is disclosed pursuant to applicable law, subpoena,
applicable professional standards or other process.
B. For the purpose of this Section 4, Confidential Information
shall mean Technical Elements (as defined below), or any information identified
by either party as "Confidential" and/or "Proprietary" or which, under all of
the circumstances, ought reasonably to be treated as confidential and/or
proprietary. Integrated retains the right to use its knowledge, experience, and
know-how, including processes, ideas, concepts and techniques developed in the
course of performing the services.
C. In connection with performing its services under this
Agreement, Integrated may use certain data, modules, components, designs,
utilities, subsets, objects, program listings, tools, models, methodologies,
programs, systems, analysis frameworks, leading practices, data bases, screen
formats, report formats, interactive design technologies, documentation manuals
and specifications ("Technical Elements"). Certain Technical Elements were owned
or developed by Integrated prior to, or independently from, its engagement
hereunder and are the sole and exclusive property of Integrated and Integrated
retains all rights thereto; and certain other Technical Elements consist of
third party works and products which Integrated has acquired the right to use.
The Trusts shall have no rights in the Technical Elements. The Trusts each agree
to treat all Technical Elements as Confidential Information.
5. SPECIAL SERVICES AND REPORTS
Integrated may provide special services and reports as may be
reasonably requested by a Trust, which may result in an additional charge, the
amount of which shall be mutually agreed upon by the parties.
6. SUBCONTRACTING
Integrated may, at its expense, and, upon prior written
approval from a Trust, subcontract with any entity or person concerning the
provision of the services contemplated hereunder; provided, however, that
Integrated shall not be relieved of any of its obligations under this Agreement
by the appointment of such subcontractor and provided further, that Integrated
shall be responsible for all acts of such subcontractor as if such acts were its
own.
7. COMPENSATION
For performing its services under this Agreement, the Trusts
shall pay Integrated a fee in accordance with Exhibit C attached hereto.
8. EXPENSES
Integrated shall each furnish, at its expense and without cost
to the Trusts, the services of its personnel to the extent that such services
are required to carry out its obligations under this Agreement. All costs and
expenses not expressly assumed by Integrated under this Paragraph shall be paid
by the Trusts. A list of typical expenses is set forth in Exhibit D; this list
is not all inclusive.
9. REFERENCES TO INTEGRATED OR THE TRUSTS
A. Neither the Trusts nor their agents shall circulate any
printed matter which contains any reference to Integrated or use Integrated's
name, or any of its trademarks, service marks or logos, including
"i-Compliance", without the prior written approval of Integrated. The Trusts
will submit printed matter requiring approval to Integrated in draft form,
allowing sufficient time for review by Integrated and its counsel prior to any
deadline for printing.
B. Integrated shall not circulate any printed matter that
contains any reference to a Trust without the prior written approval of the
Trust, excepting solely such printed matter as merely identifies the Trust as a
client of Integrated. Integrated will submit printed matter requiring approval
to the Trusts in draft form, allowing sufficient time for review by the Trust
and its counsel prior to any deadline for printing.
10. INDEMNIFICATION OF INTEGRATED
A. Integrated may rely on information reasonably believed by
it to be accurate and reliable. Except as may otherwise be required by the 1940
Act and the rules thereunder, neither Integrated nor its directors, officers,
employees, shareholders, agents, control persons or affiliates of any thereof
shall be subject to any liability for, or any damages, including consequential
damages, expenses or losses incurred by a Trust in connection with, any error of
judgment, mistake of law, any act or omission connected with or arising out of
any services rendered under or payments made pursuant to this Agreement or any
other matter to which this Agreement relates, except by reason of willful
misfeasance, bad faith or gross negligence on the part of any such persons in
the performance of the duties of Integrated under this Agreement or by reason of
reckless disregard by any of such persons of the obligations and duties of
Integrated under this Agreement. Integrated may apply to the Trusts at any time
for instructions and may consult counsel for a Trust, or its own counsel, and
with accountants and other experts with respect to any matter arising in
connection with its duties hereunder, and Integrated shall not be liable or
accountable for any action taken or omitted by it in good faith in accordance
with such instruction, or with the opinion of such counsel, accountants, or
other experts. Integrated shall not be held to have notice of any change of
authority of any officers, employees, or agents of the Trusts until receipt of
written notice thereof have been received by Integrated from the Trusts.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Integrated, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of a Trust, shall be deemed, when
rendering services to a Trust or acting on any business of a Trust, to be
rendering such services to or acting solely as an officer, trustee, employee or
agent of a Trust and not as a director, officer, employee, shareholder or agent
of or one under the control or direction of Integrated or any of its affiliates,
even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, each
Trust shall indemnify and hold harmless Integrated, each of its directors,
officers, employees, shareholders, agents, control persons and affiliates of any
thereof from and against any and all losses, damages, claims, suits, actions,
demands, expenses and liabilities (whether with or without basis in fact or
law), including legal fees and expenses and investigation expenses, of any and
every nature which Integrated may sustain or incur or which may be asserted
against Integrated by any person by reason of, or as a result of: (i) any action
taken or omitted to be taken by Integrated in good faith in reliance upon any
oral or written instructions of an authorized person of a Trust or upon the
opinion of legal counsel for a Trust or its own counsel; (ii) any action taken
or omitted to be taken by Integrated in connection with its appointment in good
faith in reliance upon any law, act, regulation or interpretation of the same
even though the same may thereafter have been altered, changed, amended or
repealed; or (iii) any action taken or omitted to be taken by Integrated on its
own initiative, in good faith and in accordance with the standard of care set
forth in this Agreement. However, indemnification under this subparagraph shall
not apply to actions or omissions of either Integrated or its directors,
officers, employees, shareholders, agents, control persons or affiliates in
cases of its or their own gross negligence, willful misconduct, bad faith, or
reckless disregard of its or their own duties hereunder.
D. Notwithstanding anything to the contrary in this Agreement,
in no event shall Integrated be liable to a Trust or any third party for any
special, consequential, punitive or incidental damages, or any other damages not
measured by the prevailing party's actual damages even if advised of the
possibility of such damages.
11. TERMINATION
A. With respect to the Compliance Program Administration
Services, the provisions of this Agreement shall be effective on the date first
above written, shall continue in effect for a period of one year ("Initial
Term") from that date and shall continue in force for successive one year terms
thereafter ("Renewal Term"), unless otherwise terminated as provided herein.
With respect to the Compliance Program Development and Implementation Services,
the provisions of this Agreement shall be effective on the date first above
written and shall terminate upon completion of the services, as mutually agreed
upon by the parties.
B. Any party may terminate this Agreement at the end of the
Initial Term, or at the end of any subsequent Renewal Term, by giving the other
parties at least one hundred eighty (180) days' prior written notice of such
termination specifying the date fixed therefore. In the event this Agreement is
terminated by a Trust prior to the end of the Initial Term or any subsequent
Renewal Term, the Trust shall make a one-time cash payment to Integrated in
consideration of services provided under this Agreement, and not as a penalty,
equal to the remaining balance of the fees payable to Integrated under this
Agreement through the end of the Initial Term or Renewal Term, as applicable.
The Trusts shall likewise reimburse Integrated for any out-of-pocket expenses
and disbursements ("out-of-pocket expenses") reasonably incurred by Integrated
in connection with the services provided under this Agreement within 30 days of
notification to the Trusts of such out-of-pocket expenses regardless of whether
such out-of-pocket expenses were incurred before or after the termination of
this Agreement.
Notwithstanding the foregoing, following any such termination,
in the event that Integrated in fact continues to perform any one or more of the
services contemplated by this Agreement (or any Schedule or Exhibit hereto) with
the consent of the Trusts, the provisions of this Agreement, including without
limitation the provisions dealing with compensation and indemnification, shall
continue in full force and effect. Fees and out-of-pocket expenses incurred by
Integrated but unpaid by the Trusts upon such termination shall be immediately
due and payable upon and notwithstanding such termination.
C. If a party materially fails to perform its duties and
obligations hereunder (a "Defaulting Party") resulting in a material loss to
another party or parties, such other party or parties (the "Non-Defaulting
Party") may give written notice thereof to the Defaulting Party, which such
notice shall set forth with sufficient detail the nature of the breach. The
Defaulting Party shall have ninety (90) days from its receipt of notice to cure
the breach. If such material breach shall not have been remedied to commercially
reasonable operating standards, the Non-Defaulting Party may terminate this
Agreement by giving sixty (60) days' written notice of such termination to the
Defaulting Party. If Integrated is the Non-Defaulting Party, its termination of
this Agreement shall not constitute a waiver of any rights or remedies with
respect to services it performed prior to such termination, or the right of
Integrated to receive such compensation as may be due as of the date of
termination or to be reimbursed for all reasonable out-of-pocket expenses. In
all cases, termination by the Non-Defaulting Party shall not constitute a waiver
by the Non-Defaulting Party of any other rights it might have under this
Agreement or otherwise against a Defaulting Party.
D. In the case of the following transactions, not in the
ordinary course of business, namely, the merger of a Trust, or a Fund, into or
the consolidation of a Trust, or a Fund, with another investment company, the
sale by a Trust, or a Fund, of all, or substantially all, of its assets to
another investment company, or the liquidation or dissolution of a Trust, or a
Fund, and distribution of its assets, or any similar transaction or any other
form of business transaction involving a Trust or a Fund, this Agreement will
terminate with respect to the applicable Trust or Trusts, or Fund or Funds, and
Integrated shall be released from any and all obligations hereunder upon the
payment of the fees, disbursements and expenses due to Integrated through the
end of the then current term of this Agreement. The parties acknowledge and
agree that the damages provision set forth above in paragraph B shall be
applicable in those instances in which Integrated is not retained to provide
compliance services subsequent to the transactions listed above.
E. Integrated will be entitled to collect from the Trusts all
reasonable expenses incurred in conjunction with termination of this Agreement,
including but not limited to out-of-pocket expenses, employee time, system fees
and fees charged by third parties with whom Integrated has contracted.
12. SERVICES FOR OTHERS
Nothing in this Agreement shall prevent Integrated or any of
its affiliates (as defined in the 0000 Xxx) from providing services for any
other person, firm or corporation (including other investment companies);
provided, however, that Integrated expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Trusts under this Agreement.
13. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Integrated to perform any
services for the Trusts which services could cause Integrated to be deemed an
"investment adviser" of a Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene a Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement, each Trust assumes
full responsibility for complying with all applicable requirements of the 1940
Act, the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
14. LIMITATION OF LIABILITY.
A. It is expressly agreed that the obligations of the Trusts
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trusts, personally, but bind only the trust
property of the Trusts. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trusts and signed by an officer of the Trusts,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trusts.
B. Standard of Care; Uncontrollable Events; Limitation of
Liability. Integrated shall use reasonable professional diligence to ensure the
accuracy of all services performed under this Agreement, but shall not be liable
to the Trusts for any action taken or omitted by Integrated in the absence of
bad faith, willful misfeasance, negligence or reckless disregard by Integrated
of its obligations and duties. The duties of Integrated shall be confined to
those expressly set forth herein, and no implied duties are assumed by or may be
asserted against Integrated hereunder.
Integrated shall provide the Trusts, at such times as each may
reasonably require, copies of reports rendered by independent public accountants
on the internal controls and procedures of Integrated relating to the services
provided by Integrated under this Agreement.
C. Representations and Warranties of the Trusts. Each Trust
represents and warrants to Integrated that:
(i) It is a Trust duly incorporated and validly existing
under the laws of the jurisdiction of its formation, and has full capacity and
authority to enter into this agreement and to carry out its obligations
hereunder;
(ii) It has all necessary authorizations, licenses and
permits to carry out its business as currently conducted;
(iii) It has been in, and shall continue to be in compliance
in all material respects with all laws and regulations applicable to its
business and operations;
(iv) This Agreement has been duly authorized by the Trust
and, when executed and delivered by the Trust, will constitute a legal, valid
and binding obligation of the Trust, enforceable against the Trust in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting the right and remedies of
creditors and secured parties.
15. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
16. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States Courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Securities and
Exchange Commission (the "SEC") issued pursuant to said 1940 Act. In addition,
where the effect of a requirement of the 1940 Act, reflected in any provision of
this Agreement, is revised by rule, regulation or order of the SEC, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
17. CONFIDENTIALITY
A. All parties hereto agree that any nonpublic information
obtained hereunder concerning another party is confidential and may not be
disclosed without the consent of the other party, except as may be required by
applicable law or at the request of a governmental agency. The parties further
agree that a breach of this provision would irreparably damage the other party
and accordingly agree that each of them is entitled, in addition to all other
remedies at law or in equity to an injunction or injunctions without bond or
other security to prevent breaches of this provision.
B. All parties hereto agree that nonpublic personal
shareholder information shall remain the sole property of the Trusts. Such
information shall not be disclosed or used for any purpose except in connection
with the performance of the duties and responsibilities described herein or as
required or permitted by law. The provisions of this Section shall survive the
termination of this Agreement. The parties agree to comply with any and all
regulations promulgated by the SEC or other applicable laws regarding the
confidentiality of shareholder information.
18. NOTICES.
All notices required or permitted under this Agreement shall
be in writing (including telex and telegraphic communication) and shall be (as
elected by the person giving such notice) hand delivered by messenger or courier
service, telecommunicated, or mailed (airmail if international) by registered or
certified mail (postage prepaid), return receipt requested, addressed to:
To the Touchstone Investments To Integrated Fund Services, Inc.
Trusts: 000 Xxxx Xxxxxx Xxxxxx,Xxx.000 Integrated:221 Xxxx 0xx Xxxxxx, Xxx 000
Xxxxxxxxxx, Xxxx 00000 Xxxxxxxxxx, Xxxx 00000
Attn: Xxxx X. XxXxxxxx Attn: Xxxxx X. Xxxxxxxxx
or to such other address as any party may designate by notice complying with the
terms of this Paragraph. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method or e-mail; and (d) on the date upon
which the return receipt is signed or delivery is refused or the notice is
designated by the postal authorities as not deliverable, as the case may be, if
mailed.
19. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by all affected parties.
20. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he or she has the full power and authority to sign this Agreement on behalf of
the party indicated, and that his or her signature will operate to bind the
party indicated to the foregoing terms.
21. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FORCE MAJEURE.
Integrated does not assume responsibility hereunder, and shall
not be liable, for any damage, loss of data, interruption, delay or any loss
whatsoever caused by events beyond its control, including and without
limitation, acts of God, interruption or failure of power or other utility,
transportation, mail, or communication services, equipment failure, acts of
civil or military authority, sabotages, war, insurrection, riots, national
emergencies, explosion, flood, accident, earthquake or other catastrophe, fire,
natural disasters, strike or other labor problems, legal action, present or
future law, governmental order or decree, rule or regulation, or shortages of
suitable parts, materials, labor or transportation.
23. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
TOUCHSTONE STRATEGIC TRUST
TOUCHSTONE INVESTMENT TRUST
TOUCHSTONE TAX-FREE TRUST
By: --------------------------
Xxxx X. XxXxxxxx
President
INTEGRATED FUND SERVICES, INC.
By:
--------------------------
Xxxxx X. Xxxxxxxxx
President
EXHIBIT A
COMPLIANCE PROGRAM DEVELOPMENT & IMPLEMENTATION
PROJECT IDENTIFICATION & SPECIFIC DESCRIPTION OF SERVICES
COMPLIANCE PROGRAM DEVELOPMENT AND IMPLEMENTATION SERVICE REVIEW
Program development and implementation services are offered through Integrated
Fund Services, Inc. Integrated will undertake a project to develop and assist in
implementing a compliance program for Integrated on behalf of the Funds. The
project activities will include:
o Produce policy and procedure summaries for board review;
o Work with the Chief Compliance Officer (the "CCO") to establish the
recordkeeping policies, procedures and program;
o Assist the CCO in developing the day-to-day monitoring system of the
Compliance Program;
o Work with the CCO to establish standards for board reporting by the
CCO.
The Compliance Program will include the following:
o Fund policies and procedures.
o Assembled reviews and documentation as requested by the board to enable
them to make findings required by Rule 38a-1.
o Establishment of a Compliance Program monitoring system.
o Development of standards for service provider reports to the CCO.
o Implementation of the Compliance Program.
o Development of standard board reporting by the CCO.
EXHIBIT B
COMPLIANCE PROGRAM ADMINISTRATION
PROJECT IDENTIFICATION & SPECIFIC DESCRIPTION OF SERVICES
COMPLIANCE PROGRAM ADMINISTRATION SERVICE REVIEW
Integrated Fund Services, Inc. provides program administration services.
Integrated will provide administrative support services to the Funds' Compliance
Program and Chief Compliance Officer as described below.
o Assist with the annual review of the Funds' Compliance Program;
o Facilitate the annual review of policies and procedures of the Funds' service
providers;
o Assist in arranging for or conducting the annual review of program
controls and procedures;
o Facilitate the development, monitoring and updating of policies and
procedures;
o Provide support with review and evaluation of material compliance issues;
o Assist with the day-to-day monitoring, data collection, recordkeeping and
assimilation of management reports provided by the Funds' service providers.
EXHIBIT C
EXAMPLES OF TRUST EXPENSES
Such expenses may include, but are not limited to, the costs and
expenses incurred in connection with the services provided under this Agreement
of:
1. Officers and employees of Integrated in attending meetings of
the Board of Trustees of the Trust or otherwise visiting the
offices of the Trusts;
2. All postage, envelopes, checks, drafts, continuous forms, bank
charges, reports, communications, statements and other
materials;
3. File interface expenses (e.g., FundSmith, SunGard, Expeditor
and other distribution partners);
4. Telephone, telegraph and remote transmission lines;
5. Necessary outside record storage, record management and
maintenance, record destruction, document shredding, media for
storage of records (e.g., microfilm, microfiche, computer
tapes);
6. Charges imposed by third-party service or software providers
for items such as, but not limited to, regulatory updates; and
7. Any and all assessments, taxes or levies assessed on
Integrated for services provided under this Agreement.
EXHIBIT D
FEE ARRANGEMENTS
In addition to the fees listed below, actual expenses will be billed as
incurred. Should the scope, type or extent of our Services change significantly,
we reserve the right to adjust our fees accordingly.
TOUCHSTONE STRATEGIC TRUST
TOUCHSTONE INVESTMENT TRUST
TOUCHSTONE TAX-FREE TRUST
Compliance Program Development and Implementation $
Fund Compliance Program Administration $
EXHIBIT D
FEE ARRANGEMENTS
In addition to the fees listed below, actual expenses will be billed as
incurred. Should the scope, type or extent of our Services change significantly,
we reserve the right to adjust our fees accordingly.
TOUCHSTONE VARIABLE SERIES TRUST
Compliance Program Development and Implementation $
Fund Compliance Program Administration $
