EXHIBIT A
DRAFT
1/25/00
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Plan") is made as of this
____ day of _____________, 2000 by and between Countrywide Strategic Trust
("Strategic Trust") for itself and on behalf of its series which are the subject
of this Plan and are set forth below (hereinafter, collectively the "Acquiring
Funds" or individually an "Acquiring Fund"), and Touchstone Series Trust
("Touchstone Trust ") for itself and on behalf of its series which are the
subject of this Plan and are set forth below (hereinafter, collectively the
"Acquired Funds" or individually an "Acquired Fund").
This Plan governs the proposed issuance of shares of each Acquiring Fund in
exchange for all of the assets and liabilities of the specific Acquired Fund set
forth opposite the name of that Acquiring Fund in the table below.
Acquiring Funds Acquired Funds
- --------------- --------------
Countrywide Emerging Growth Fund Touchstone Emerging Growth Fund
Countrywide International Equity Fund Touchstone International Equity Fund
Countrywide Value Plus Fund Touchstone Value Plus Fund
Countrywide Value Plus Fund Touchstone Growth & Income Fund
This Plan is intended to be and is adopted as a plan of reorganization and
liquidation within the meaning of Section 368(a)(1)(C) of the Internal Revenue
Code of 1986, as amended (the "Code"). A reorganization (each a
"Reorganization") will comprise the transfer of all of the assets of an Acquired
Fund to the corresponding Acquiring Fund in exchange solely for such
corresponding Acquiring Fund's shares and the assumption by the Acquiring Fund
of certain liabilities of the corresponding Acquired
Fund, and the constructive distribution after the Closing Date (as hereinafter
defined) of such shares to the shareholders of the corresponding Acquired Fund
in liquidation of the Acquired Fund, all upon the terms and conditions
hereinafter set forth in this Plan.
WHEREAS, Strategic Trust and Touchstone Trust are each (a) a Massachusetts
business trust duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts, and (b) registered as an open-end
series investment company under the Investment Company Act of 1940, as amended(
the "1940 Act"); and each Acquired Fund owns securities which generally are
assets of the character in which the corresponding Acquiring Fund is permitted
to invest; and
WHEREAS, effective as of the Closing Date, the shares of beneficial
interest of each Acquiring Fund will consist of two separate classes, designated
as Class A shares of beneficial interest ("Class A") and Class C shares of
beneficial interest ("Class C"). The shares of each class of each Acquiring Fund
(the "Acquiring Class") that the Acquiring Fund will issue to the shareholders
of the corresponding Acquired Fund class (the "Corresponding Acquired Class")
are set forth in the Corresponding Classes Table in Schedule A; and
WHEREAS the Board of Trustees of Touchstone Trust has determined that an
exchange of all of the assets of each Acquired Fund for shares of the
corresponding Acquiring Fund and the assumption of the liabilities of such
Acquired Fund by the corresponding Acquired Fund is in the best interests of
each Acquired Fund's Shareholders (as defined below) and that the interests of
the existing shareholders of each Acquired Fund will not be diluted as a result
of this transaction; and
WHEREAS, the execution, delivery and performance of this Plan will have
been duly authorized prior to the Closing Date by all necessary action on the
part of Strategic Trust and Touchstone Trust, respectively, and this Plan
constitutes a valid and binding obligation of each
2
of the parties hereto enforceable in accordance with its terms, subject to the
requisite approval of the shareholders of each Acquired Fund.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Transfer of Assets and Liabilities of Each Acquired Fund to the
Corresponding Acquiring Fund in Exchange for Such Corresponding
Acquiring Fund's Shares; Liquidation of the Acquired Funds.
1.1 Transfer and Exchange of Assets for Shares. Subject to the
requisite approval of the shareholders of each Acquired Fund and to the other
terms and conditions set forth herein and on the basis of the representations
and warranties contained herein, each of the Touchstone Emerging Growth Fund,
Touchstone International Equity Fund, Touchstone Value Plus Fund and Touchstone
Growth & Income Fund series of Touchstone Trust shall transfer to each of
Countrywide Emerging Growth Fund, Countrywide International Equity Fund,
Countrywide Value Plus Fund and Countrywide Value Plus Fund series of Strategic
Trust, respectively, and each of Countrywide Emerging Growth Fund, Countrywide
International Equity Fund, Countrywide Value Plus Fund and Countrywide Value
Plus Fund series of Strategic Trust shall acquire from each of Touchstone
Emerging Growth Fund, Touchstone International Equity Fund, Touchstone Value
Plus Fund and Touchstone Growth & Income Fund series of Touchstone Trust,
respectively, as of the Closing Date, all of the Assets (as hereinafter defined)
(a) of the Touchstone Emerging Growth Fund in exchange for that number of
Acquiring Class shares of Countrywide Emerging Growth Fund determined in
accordance with Section 2.2 hereof and the assumption by Countrywide Emerging
Growth Fund of the Liabilities (as hereinafter defined) of the Touchstone
Emerging Growth Fund, (b) of the Touchstone International Equity Fund in
exchange for that number of Acquiring Class shares of the
3
Countrywide International Equity Fund determined in accordance with Section 2.2
hereof, and the assumption by the Countrywide International Equity Fund and of
the Liabilities of the Touchstone International Equity Fund, (c) of the
Touchstone Value Plus Fund in exchange for that number of Acquiring Class shares
of the Countrywide Value Plus Fund determined in accordance with Section 2.2
hereof, and the assumption by Countrywide Value Plus Fund of the Liabilities of
the Touchstone Value Plus Fund, and (d) of the Touchstone Growth & Income Fund
in exchange for that number of Acquiring Class shares of the Countrywide Value
Plus Fund determined in accordance with Section 2.2 hereof, and the assumption
by the Countrywide Value Plus Fund of the Liabilities of the Touchstone Growth &
Income Fund. Such transactions shall take place at the closing provided for in
Article 3 of this Plan (the "Closing").
Touchstone Trust will (a) pay or cause to be paid to Strategic Trust
any interest received on or after the Closing Date with respect to the Assets of
each Acquired Fund and (b) transfer to Strategic Trust any distributions,
rights, stock dividends or other property received by Touchstone Trust after the
Closing Date as distributions on or with respect to the Assets of each Acquired
Fund. Any such interest, distributions, rights, stock dividends or other
property so paid or transferred or received directly by Strategic Trust shall be
allocated by Strategic Trust to the account of the Acquiring Fund and the
Acquiring Class that acquired the Assets to which such property relates.
1.2 Description of Assets to be Acquired. The assets of each Acquired
Fund to be acquired by each Acquiring Fund shall consist of all property,
including without limitation, all cash, cash equivalents, securities,
commodities and future interests, receivables (including interest or dividends
receivable), any claims or rights of action or rights to register shares under
applicable securities laws, and other property owned by each Acquired Fund and
any deferred or
4
prepaid expenses shown as an asset on the books of each Acquired Fund at the
Effective Time (the "Assets").
1.3 Liabilities to be Assumed. Each Acquiring Fund shall assume from
the corresponding Acquired Fund all liabilities, expenses, costs, charges and
reserves of such Acquired Fund of whatever kind or nature, whether absolute,
accrued, contingent or otherwise, whether or not arising in the ordinary course
of business, whether or not determinable as of the Effective Time and whether or
not specifically referred to in this Plan; provided, however, that it is
understood and agreed by the parties hereto that each Acquired Fund will utilize
its best efforts to discharge all of its known debts, liabilities, obligations
and duties (the "Liabilities") prior to the Effective Time.
1.4 Liquidation of Each Acquired Fund. As provided in Section 3.3 of
this Plan, as soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), Touchstone Trust will effect the termination and
liquidation of each Acquired Fund in the manner provided in its Declaration of
Trust and in accordance with applicable law. On the Closing Date, each Acquired
Fund will distribute pro rata to its shareholders of record, determined as of
the close of business on the Valuation Date (the "Acquired Fund's
Shareholders"), Acquiring Class shares received by such Acquired Fund pursuant
to Section 1.1 in exchange for each such shareholder's interest in each
Corresponding Acquired Class evidenced by such shareholder's shares of
beneficial interest in each Acquired Fund. Such liquidation and distribution
will be accomplished by opening accounts on the books of each Acquiring Fund in
the names of each Acquired Fund's Shareholders and transferring the shares
credited to the account of each Acquired Fund on the books of the corresponding
Acquiring Fund. Each account opened shall represent the respective pro rata
number of Acquiring Class
5
shares due each Acquired Fund Shareholder. Fractional shares of each Acquiring
Class shall be rounded to the nearest thousandth of one share. All issued and
outstanding shares of each Acquired Fund shall simultaneously be cancelled on
the books of the Acquired Fund.
1.5 No Issuance of Certificates. None of the Acquiring Funds will
issue certificates representing its Acquiring Class shares issued in connection
with the exchange described in Section 1.1 hereof.
1.6 Transfer Agent's Records. Ownership of Acquiring Class shares will
be shown on the books of Strategic Trust's transfer agent. Acquiring Class
shares will be issued in the manner described in the then-effective Prospectus
and Statement of Additional Information of Strategic Trust relating to Acquiring
Class shares.
1.7 Transfer Taxes. Any transfer taxes payable upon the issuance of
Acquiring Class shares in a name other than the registered holder of the shares
on the books of each Acquired Fund as of the time of issuance shall be paid by
the person to whom such shares are to be issued as a condition of such transfer.
1.8 Reporting Responsibilities of each Acquired Fund. Any reporting
obligations relating to an Acquired Fund are and shall remain the responsibility
of Touchstone Trust up to and including the Closing Date and such later date on
which each Acquired Fund is liquidated and Touchstone Trust is dissolved.
1.9 Operating Plan. From and after the Closing Date, the rights and
privileges of the Class A and Class C shares of each Acquiring Fund shall be
determined under the provisions of Massachusetts law, Strategic Trust's
Declaration of Trust, as amended from time to time, Strategic Trust's Bylaws and
the operating plan adopted by Strategic Trust's Board of Trustees which
establishes policies and procedures for allocating income and expenses between
6
each Acquiring Fund's Class A shares and Class C shares which further defines
the relative voting rights of the Class A and Class C shares and which otherwise
delineates the relative rights, privileges and liabilities of the Class A and
Class C shares.
2. Valuation.
2.1 Net Asset Value of each Acquired Fund. The value of the net assets
to be acquired by each Acquiring Fund hereunder shall be the value of the Assets
of the corresponding Acquired Fund, less the Liabilities of such Acquired Fund,
and shall be computed at the time and in the manner set forth in Strategic
Trust's then-current Prospectus and Statement of Additional Information on the
Closing Date or such other date as the parties may agree in writing (such time
and date being hereinafter called the "Valuation Date").
2.2 Exchange Ratio. [DEFINE EXCHANGE RATIO AT NAV]
2.3 Documentation. All computations of value shall be made by
[Countrywide] in accordance with its regular practice as pricing agent for
Strategic Trust. In addition, Touchstone Trust shall furnish to Strategic Trust
within 60 days of the Closing Date a statement of each Acquired Fund's assets
and liabilities as of the Effective Time, which statement shall be prepared in
accordance with generally accepted accounting principles consistently applied
and shall be certified by the Treasurer of Touchstone Trust. In addition,
Touchstone Trust shall supply to Strategic Trust in such form as is reasonably
satisfactory to Strategic Trust, a statement of earnings and profits of each
Acquired Fund for federal income tax purposes which may be carried over to the
shares of each Acquiring Class as a result of Section 381 of the Code. This
statement shall be provided within 180 days of the Closing Date.
3. Closing and Closing Date.
7
3.1 Establishment of Closing Dates; Description of Closing. The
"Closing Date" shall be the next full business day following the Valuation Date
or such later date as the parties may agree in writing. All acts taking place at
the Closing shall be deemed to take place simultaneously as of the close of
business on the last business day immediately preceding the Closing Date (the
"Effective Time"), unless otherwise provided. The Closing shall be held on the
Closing Date at 9:00 a.m. at the principal offices of Frost & Jacobs LLP, or
such other time and/or place as the parties may agree.
3.2 Deliveries by Transfer Agent. Investors Bank & Trust Company, as
custodian for Touchstone Trust shall deliver at the Closing a certificate of an
authorized officer stating that: (a) each Acquired Fund's portfolio securities,
cash and any other assets shall have been delivered in proper form to Strategic
Trust on the Closing Date; and (b) all necessary taxes, including all applicable
federal and state stock transfer stamps, if any, shall have been paid, or
provision for payment shall have been made in connection with the delivery of
portfolio securities.
3.3 Closing of New York Stock Exchange. In the event that on the
Valuation Date: (a) the New York Stock Exchange is closed to trading or trading
thereon is restricted; or (b) trading or the reporting of trading on said
Exchange or elsewhere is disrupted so that accurate appraisal of the value of
the total net assets of each Acquired Fund is impracticable, then 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.
3.4 List of each Acquired Fund's Shareholders. Touchstone Trust shall
deliver at the Closing a list of names and addresses of the shareholders of each
Acquired Fund and the class, number and percentage ownership of outstanding
shares owned by each such
8
shareholder, all as of the Effective Time, certified by the Secretary or
Assistant Secretary of Touchstone Trust. Strategic Trust shall issue and deliver
to said Secretary or Assistant Secretary of Touchstone Trust a confirmation
evidencing Acquiring Class shares to be credited to the corresponding Acquired
Fund as soon as practicable after the Closing, or provide other evidence
satisfactory to Touchstone Trust that such Acquiring Class shares have been
credited to the account of the corresponding Acquired Fund on the records of
Strategic Trust's transfer agent maintained with respect to the Acquiring Class
shares. At the Closing, each party shall deliver to the other such bills of
sale, checks, assignments, share certificates, receipts or other transfer
documents as such other party may reasonably request.
4. Representations and Warranties.
4.1 Touchstone Trust, on behalf of each Acquired Fund, represents and
warrants to Strategic Trust, on behalf of each Acquiring Fund, as follows:
(a) Touchstone Trust is a voluntary association with transferable
shares of the type commonly referred to as a Massachusetts business trust, duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts;
(b) Touchstone Trust 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 Touchstone Trust relating to the Acquired Funds conform in all
material respects to the applicable requirements of the Securities Act of 1933,
as amended (the "1933 Act"), and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any
9
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(d) Touchstone Trust is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of its
Declaration of Trust or By-Laws, as each may have been amended to the date
hereof, or of any agreement, indenture, instrument, contract, lease or other
undertaking to which Touchstone Trust is a party or by which it is bound;
(e) Touchstone Trust has no material contracts or other
commitments (other than this Agreement) which, if terminated prior to the
Closing Date, would result in an additional liability of any of the Acquired
Funds;
(f) No litigation or administrative proceedings or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against Touchstone Trust or any Acquired Fund or any of
their respective properties or assets which, if adversely determined, would
materially and adversely affect their financial condition or the conduct of
their business. Touchstone Trust knows of no facts which 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
which materially or adversely affects its business or its ability to consummate
the transactions herein contemplated.
(g) At the Closing Date, all federal and other tax returns and
reports of the Acquired Funds required by law to have been filed by such date
shall have been filed, and all federal and other taxes shall have been paid so
far as due, or provisions shall have been made for
10
the payment thereof and, to the best of Touchstone Trust's knowledge, no such
return is currently under audit and no assessment has been asserted with respect
to such returns;
(h) The Touchstone Trust's Financial Statements, copies of which
have been previously delivered to Strategic Trust, fairly present the financial
positions of each Acquired Fund as of the Fund's most recent fiscal year-end and
the results of the Fund's operations and changes in the Fund's net Assets for
the periods indicated. The Touchstone Trust's Financial Statements are in
accordance with generally accepted accounting principals consistently applied.
For purposes of this Agreement, the Financial Statements include the audited
financial statements of each Acquired Fund for its most recently completed
fiscal year and, if applicable, the un-audited financial statements of each
Acquired Fund for its most recently completed semi-annual period.
(i) For each fiscal year of its operation each of the Acquired
Funds has (i) met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company and (ii) been treated as a
separate corporation for federal income tax purposes pursuant to Section 851(h)
of the Code, and (iii) each of the Acquired Funds intends to be so treated as a
separate corporation and meet such qualification requirements for its current
taxable year;
(j) All issued and outstanding shares of each Acquired Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable with no personal liability attaching to the ownership
thereof (recognizing that, under Massachusetts law, each Acquired Fund's
Shareholders could, under certain circumstances, be held personally liable for
obligations of the respective Acquired Fund);
11
(k) At the Closing Date, Touchstone Trust, on behalf of the
Acquired Funds, will have good and marketable title to the Assets to be
transferred to the Acquiring Funds pursuant hereto 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 Funds will acquire good and
marketable title thereto, subject to no restrictions on the full transfer
thereof, including such restrictions as might arise under the 1933 Act, other
than as disclosed to the Acquiring Funds.
(l) The execution, delivery and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action on the
part of Touchstone Trust's Board of Trustees, and on the date hereof and on the
Closing Date this Agreement will constitute a valid and binding obligation of
Touchstone Trust on behalf of each respective Acquired Fund enforceable against
Touchstone Trust 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 principles of equity;
(m) On the Closing Date, the performance of this Agreement shall
have been duly authorized by all necessary action by the shareholders of each
Acquired Fund.
(n) Since the date of the Touchstone Trust's Financial
Statements, there has been no material adverse change in the financial
condition, result of operations, business, properties or Assets of any Acquired
Fund.
4.2 Strategic Trust, on behalf of each Acquiring Fund, represents and
warrants to Touchstone Trust on behalf of each Acquired Fund as follows:
12
(a) Strategic Trust is a voluntary association with transferable
shares of the type commonly referred to as a Massachusetts business trust, duly
organized, validly existing in good standing under the laws of the Commonwealth
of Massachusetts;
(b) Strategic Trust 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 of Strategic Trust relating to the Acquiring Funds conform in all
material respects to the applicable requirements of the 1933 Act and the 1940
Act and the rules and regulations of the Commission thereunder and do not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(d) Strategic Trust is not, and the execution, delivery and
performance of this Agreement will not result, in a material violation of its
Declaration of Trust or By-Laws, as each may have been amended to the date
hereof, or of any agreement, indenture, instrument, contract, lease or other
undertaking to which Strategic Trust is a party or by which it is bound;
(e) Strategic Trust has no material contracts or other
commitments (other than by this Agreement) which, if terminated prior to the
Closing Date, would result in an additional liability of any of the Acquiring
Funds;
(f) No litigation or administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against Strategic Trust or any Acquiring Fund or any of
their respective properties or assets which, if adversely determined, would
materially and adversely affect their financial condition or
13
the conduct of their business. Strategic Trust knows of no facts which 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 which materially or adversely affects its business or its
ability to consummate the transactions herein contemplated;
(g) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Funds required by law to have been filed by such date
shall have been filed, and all federal and other taxes shall have been paid so
far as due, or provision shall have been made for the payment thereof and, to
the best of Strategic Trust's knowledge, no such return is currently under audit
and no assessment has been asserted with respect to such returns;
(h) For each fiscal year of its operation, each of the Acquiring
Funds has (i) met the requirements of Subchapter M of the Code for qualification
and treatment as a regulated investment company and (ii) been treated as a
separate corporation for federal income tax purposes pursuant to Section 851(h)
of the Code, and each of the Acquiring Funds intends to be so treated as a
separate corporation and meet such qualification requirements for its current
taxable year;
(i) All issued and outstanding shares of each Acquiring Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable with no personal liability attaching to the ownership
thereof (recognizing that, under Massachusetts law, each Acquiring Fund's
Shareholders could, under certain circumstances, be held personally liable for
obligations of the respective Acquiring Fund);
(j) The execution, delivery and performance of this Agreement
have been duly authorized as of the date hereof by all necessary action on the
part of the Strategic Trust's Board of Trustees, and on the date hereof and on
the Closing Date this Agreement will
14
constitute a valid and binding obligation of Strategic Trust on behalf of each
respective Acquiring Fund enforceable against Strategic Trust 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 principles of equity.
(k) Since [_________________], there has been no material adverse
change in the financial condition, business, properties or Assets of any
Acquiring Fund.
5. Conditions Precedent to Obligations of the Parties.
5.1 Representations and Warranties. All representations and warranties
of each of Strategic Trust and Touchstone Trust set forth herein shall be true
and correct in all material respects as of the date hereof and, except as may be
affected by the transactions contemplated by this Plan, as of the Effective Time
with the same force and effect as if made on and as of the Effective Time.
5.2 Approval of Plan by Shareholders of Each Acquired Fund. This Plan
and the transactions contemplated hereby shall have been approved by the
requisite vote of the holders of the outstanding shares of each Acquired Fund in
accordance with the provisions of the law of business trusts of the Commonwealth
of Massachusetts, the provisions of the 1940 Act and the provisions of
Touchstone Trust's Declaration of Trust and By-laws;
5.3 No Adverse Actions. On the Closing Date, no action, suit or other
proceeding shall be 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 Plan or the transactions contemplated hereby;
15
5.4 Consents and Approvals.
(a) All consents of other parties and all other consents, orders
and permits of federal, state and local regulatory authorities (including those
of the Commission and of state securities authorities, including "no-action"
positions of such federal or state authorities) deemed necessary by Strategic
Trust or Touchstone Trust to permit consummation, in all material respects, of
the transactions contemplated hereby, shall have been obtained, except where
failure to obtain any such consent, order or permit would not involve a risk of
a material adverse effect on the assets or properties of any Acquired Fund or
any Acquiring Fund, provided that either party hereby may for itself waive any
such conditions; and
(b) The Board of Trustees of Strategic Trust and Touchstone Trust
shall have approved the terms of the Reorganization and this Plan and shall have
determined that (i) participation by the Acquiring Funds and the Acquired Funds,
respectively, in the Reorganization is in the best interests of such Funds, (ii)
the interests of existing shareholders of each of the Acquiring Funds and the
Acquired Funds, respectively, will not be diluted as a result of the
Reorganization, (iii) the terms of the Reorganization, including the
consideration to be paid or received, are reasonable and fair and do not involve
overreaching on the part of any person, and (iv) the Reorganization is
consistent with the policies of Strategic Trust and Touchstone Trust,
respectively, as recited in its respective registration statement and reports
filed under the 1940 Act.
5.5 Effectiveness of Registration Statement on Form N-14; Exemptive
Order. A Registration Statement on Form N-14 relating to each Acquiring Class
shares issuable hereunder, including the combined Proxy Statement of each
Acquired Fund and the Prospectus of Strategic Trust (relating to the Acquiring
Class shares issuable pursuant to the terms of this
16
Plan) constituting a part thereof, shall have become effective under the 1933
Act and no stop order suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act. Additionally, in response to an application
for exemption to be submitted by Strategic Trust, Touchstone Trust and certain
affiliated persons, the Commission shall have issued an order exempting
Strategic Trust, Touchstone Trust and the other applicants from certain
provisions of the 1940 Act or the issues raised in the application shall have
otherwise been resolved to the mutual satisfaction of the parties.
5.6 Tax Opinions. Each of Strategic Trust and Touchstone Trust shall
have obtained an opinion of Frost & Jacobs LLP, legal counsel to Strategic Trust
and Touchstone Trust, in form and substance reasonably satisfactory to their
respective Boards, to the effect that:
(a) The transfer of all of an Acquired Fund's Assets solely in
exchange for the corresponding Acquiring Class shares and the assumption by the
Acquiring Fund of the Liabilities of the Acquired Fund, and the distribution of
such Acquiring Class shares to the shareholders of the Acquired Fund, will
constitute a "reorganization" within the meaning of Section 368 (a)(1)(C) of the
Code and the Acquiring Fund and the Acquired Fund are each a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(b) No gain or loss will be recognized by an Acquired Fund upon
the transfer of the Acquired Fund's Assets to the corresponding Acquiring Fund
in exchange for the Acquiring Class shares and the assumption by the Acquiring
Fund of the Liabilities of the Acquired Fund or upon the distribution (whether
actual or constructive) of the Acquiring Class shares to the Acquired Fund's
Shareholders in exchange for their shares of the Acquired Fund;
17
(c) The tax basis of each Acquired Fund's Assets acquired by an
Acquiring Fund will be the same to the Acquiring Fund as the tax basis of such
Assets to the Acquired Fund immediately prior to the Reorganization, and the
holding period of the Assets of each Acquired Fund in the hands of the
corresponding Acquiring Fund will include the period during which those assets
were held by the Acquired Fund;
(d) No gain or loss will be recognized by an Acquiring Fund upon
the receipt of the Assets of an Acquired Fund solely in exchange for the
Acquiring Class shares and the assumption by the Acquiring Fund of the
Liabilities of the Acquired Fund;
(e) No gain or loss will be recognized by shareholders of any
Acquired Fund upon the distribution of the Acquiring Class shares to such
shareholders, provided such shareholders receive solely such Acquiring Class
shares (including fractional shares) in exchange for their Corresponding
Acquired Class shares; and
(f) The aggregate tax basis for the Acquiring Class shares,
including any fractional shares, received by each shareholder of each Acquired
Fund pursuant to the Reorganization will be the same as the aggregate tax basis
of the Corresponding Acquired Class shares held by such shareholder immediately
prior to the Reorganization, and the holding period of the Acquiring Class
shares, including any fractional shares, to be received by each shareholder of
the Acquired Fund will include the period during which the Corresponding
Acquired Class shares exchanged therefor were held by such shareholder (provided
that the Corresponding Acquired Class shares were held as a capital asset on the
date of the Reorganization).
18
6. Expenses.
The expenses incurred in connection with the entering into and
carrying out the provisions of this Plan will be borne and paid by Touchstone
Advisors, Inc., and not by each Acquiring Fund or each Acquired Fund.
7. Termination.
7.1 Mutual Agreement. This Plan may be terminated by the mutual
agreement of Strategic Trust and Touchstone Trust.
7.2 Material Breach. In addition, either Strategic Trust or Touchstone
Trust may, at its option, terminate this Plan at or prior to the Closing Date on
account of a material breach by the other of any agreement contained herein to
be performed by such other party at or prior to the Closing Date.
7.3 Failure of Condition Precedent. In addition, either Strategic
Trust or Touchstone Trust may, at its option, terminate this Plan at or prior to
the Closing Date on account of a condition herein expressed to be precedent to
the obligation of such party which has not been met and which appears cannot
reasonably, or will not, be met.
7.4 Effects of Termination. In the event of any such termination,
there shall be no liability for damage on the part of Strategic Trust or
Touchstone Trust or their respective Trustees or officers.
8. Limitation on Liabilities. The obligations of Strategic Trust,
Touchstone Trust and each Fund shall not bind any of the trustees, shareholders,
nominees, officers, agents, or employees of Strategic Trust or Touchstone Trust
personally, but shall bind only the Assets and property of the Acquiring Funds
and the Acquired Funds. The execution and delivery of this Plan by the parties'
officers shall not be deemed to have been made by any of them individually
19
or to impose any liability on any of them personally, but shall bind only the
Assets and the property of the Acquiring Funds or the Acquired Funds, as
appropriate.
9. Amendment.
This Plan may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties hereto; provided, however,
that following the meeting of the shareholders of each Acquired Fund described
in Section 5.2 of this Plan, no such amendment may have the effect of changing
the provisions for determining the number of shares of each corresponding
Acquiring Class shares to be issued to an Acquired Fund's Shareholders under
this Plan to the detriment of such shareholders without their further approval.
10. Miscellaneous.
10.1 Headings. The section headings contained in this Plan will have
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
10.2 Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
20
IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
executed on its behalf by its duly authorized officer as of the day and year
first written above.
TOUCHSTONE SERIES TRUST
By: /s/
---------------------------------
Robert H. Leshner, President
COUNTRYWIDE STRATEGIC TRUST
By: /s/
---------------------------------
Robert H. Leshner, President
TOUCHSTONE ADVISORS, INC.
(SOLELY TO EVIDENC+E ITS CONCURRENCE
WITH SECTION 6 HEREOF)
By: /s/
---------------------------------
, President
21
SCHEDULE A
I. CORRESPONDING CLASSES TABLE
Acquiring Fund Classes Corresponding Acquired Fund Classes
---------------------- -----------------------------------
Emerging Growth Fund Emerging Growth Fund
A Shares A Shares
C Shares C Shares
International Equity Fund International Equity Fund
A Shares A Shares
C Shares C Shares
Value Plus Fund Value Plus Fund
A Shares A Shares
C Shares C Shares
Value Plus Fund Growth & Income Fund
A Shares A Shares
C Shares C Shares