AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this __ day of _______, 2011, by and between the Touchstone Large Cap Growth
Fund (the "Acquiring Fund") a series of the Touchstone Strategic Trust ("TST")
and the Touchstone Healthcare and Biotechnology Fund (the "Acquired Fund"), a
series of the Touchstone Funds Group Trust ("TFGT"). TST is a Massachusetts
business trust, with its principal place of business at 303 Broadway, Suite
1100, Cincinnati, Ohio 45202. TFGT is a Delaware statutory trust, with its
principal place of business at 303 Broadway, Suite 1100, Cincinnati, Ohio 45202.
The reorganization (the "Reorganization") will consist of (i) the transfer
of all of the assets of the Acquired Fund in exchange solely for shares of
beneficial interest, without par value, of the Acquiring Fund (the "Acquiring
Fund Shares"); (ii) the assumption by the Acquiring Fund of all of the
liabilities of the Acquired Fund; and (iii) the distribution, after the Closing
Date hereinafter defined, of the Acquiring Fund Shares to the shareholders of
the Acquired Fund in liquidation of the Acquired Fund as provided herein, all
upon the terms and conditions hereinafter set forth in this Agreement. The
parties intend that the Reorganization shall qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
WHEREAS, the Acquired Fund and the Acquiring Fund are each a separate
investment series of an open-end, registered investment company of the
management type and the Acquired Fund owns securities that generally are assets
of the type and character in which the Acquiring Fund is permitted to invest;
WHEREAS, the Acquired Fund and the Acquiring Fund are authorized to issue
their shares of beneficial interest;
WHEREAS, the Board of Trustees of TST, including a majority of the
Trustees who are not "interested persons" of the Trust, as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") ("Independent
Trustees"), have determined that the transactions contemplated herein will be in
the best interests of the Acquiring Fund and its shareholders and that the
interests of the existing shareholders of the Acquiring Fund will not be diluted
in value as a result of the transactions contemplated herein;
WHEREAS, the Board of Trustees of TFGT, including a majority of the
Independent Trustees, have determined that it is in the best interests of the
Acquired Fund to exchange all of its assets and liabilities for Acquiring Fund
Shares and that the interests of the shareholders of the Acquired Fund will not
be diluted in value as a result of the transactions contemplated herein;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
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ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth and
on the basis of the representations and warranties contained herein, the
Acquired Fund agrees to transfer all of the Acquired Fund's assets as set forth
in paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange
for the Acquired Fund's assets (i) to deliver to the Acquired Fund the number of
Acquiring Fund Shares, including fractional Acquiring Fund Shares, computed in
the manner and as of the time and date set forth in paragraphs 2.2 and 2.3; and
(ii) to assume all of the liabilities of the Acquired Fund, as set forth in
paragraph 1.3. Such transactions shall take place on the Closing Date provided
for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be acquired
by the Acquiring Fund shall consist of all property, including, without
limitation, all cash, securities, commodities, interests in futures and
dividends or interest receivables, that is owned by the Acquired Fund and any
deferred or prepaid expenses shown as an asset on the books of the Acquired Fund
on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
unaudited financial statements, which contain a list of all of the Acquired
Fund's assets as of the date thereof. The Acquired Fund hereby represents that
as of the date of the execution of this Agreement there have been no changes in
its financial position as reflected in said financial statements other than
those occurring in the ordinary course of its business in connection with the
purchase and sale of securities and the payment of its normal operating
expenses. The Acquired Fund reserves the right to sell any securities, but will
not, without the prior written approval of the Acquiring Fund, acquire any
additional securities other than securities of the type in which the Acquiring
Fund is permitted to invest.
1.3 LIABILITIES TO BE ASSUMED. The Acquired Fund will endeavor to
discharge all of its known liabilities and obligations prior to the Closing
Date. The Acquiring Fund shall assume all of the Acquired Fund's liabilities and
obligations of any kind whatsoever, whether absolute, accrued, contingent or
otherwise in existence on the Closing Date.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as
is conveniently practicable (the "Liquidation Date"), (a) the Acquired Fund will
liquidate and distribute pro rata to the Acquired Fund's shareholders of record,
determined as of the close of business on the Valuation Date (the "Acquired Fund
Shareholders"), the Acquiring Fund Shares received by the Acquired Fund pursuant
to paragraph 1.1; and (b) the Acquired Fund will thereupon proceed to terminate
as set forth in paragraph 1.8 below. Such liquidation and distribution will be
accomplished by the transfer of the Acquiring Fund Shares then credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share records of the Acquiring Fund in the names of the Acquired Fund
Shareholders and representing the respective pro rata number of the Acquiring
Fund Shares due such shareholders. All issued and outstanding shares of the
Acquired Fund will simultaneously be canceled on the books of the Acquired Fund.
The Acquiring Fund shall not issue certificates representing the Acquiring Fund
Shares in connection with such exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown
on the books of the Acquiring Fund's transfer agent. Shares of the Acquiring
Fund will be issued in the manner described in the Prospectus/Proxy Statement on
Form N-14 which has been distributed to shareholders of the Acquired Fund as
described in paragraph 4.1(p).
1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
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1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Acquired
Fund is and shall remain the responsibility of the Acquired Fund up to and
including the Closing Date and such later date on which the Acquired Fund is
terminated.
1.8 TERMINATION. The Trust shall take all necessary and appropriate steps
under applicable law to terminate the Acquired Fund promptly following the
Closing Date and the making of all distributions pursuant to paragraph 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets
computed as of the close of business on the New York Stock Exchange on the
business day preceding the Closing Date (such time and date being hereinafter
called the "Valuation Date"), using the valuation procedures set forth in TST's
Declaration of Trust and the Acquiring Fund's then current prospectus and
statement of additional information or such other valuation procedures as shall
be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring
Fund Shares shall be the net asset value per share of the Acquiring Fund
computed as of the close of business on the New York Stock Exchange on the
Valuation Date, using the valuation procedures set forth in TST's Declaration of
Trust and the Acquiring Fund's then current prospectus and statement of
additional information.
2.3 SHARES TO BE ISSUED. The number of full and fractional Acquiring Fund
Shares to be issued in exchange for the Acquired Fund's assets shall be
determined by multiplying the outstanding shares of the Acquired Fund by the
ratio computed by dividing the net asset value per share of the Acquired Fund by
the net asset value per share of the Acquiring Fund on the Valuation Date,
determined in accordance with paragraph 2.2. Shareholders of record of Class A
Shares of the Acquired Fund at the Closing Date shall be credited with full and
fractional Class A Shares of the Acquiring Fund and shareholders of record of
Class C Shares of the Acquired Fund at the Closing Date shall be credited with
full and fractional Class C Shares of the Acquiring Fund.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
JPMorgan Chase Bank, N.A., the Acquiring Fund's and the Acquired Fund's
accounting agent, in accordance with its regular practice in pricing the shares
and assets of the Acquiring Fund and the Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing of the Reorganization (the "Closing") shall
take place on or about March 28, 2011 or such other date as the parties may
agree to in writing (the "Closing Date"). All acts taking place at the Closing
shall be deemed to take place simultaneously immediately prior to the opening of
business on the Closing Date unless otherwise provided. The Closing shall be
held as of 8:00 a.m. EST at the offices of the Trust, or at such other time
and/or place as the parties may agree.
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3.2 EFFECT OF SUSPENSION IN TRADING. In the event that on the Valuation
Date (a) the New York Stock Exchange or another primary trading market for
portfolio securities of the Acquiring Fund or the Acquired Fund shall be closed
to trading or trading thereon shall be restricted; or (b) trading or the
reporting of trading on said Exchange or elsewhere shall be disrupted so that an
accurate determination of the value of the net assets of the Acquiring Fund or
the Acquired Fund is impracticable, the Valuation Date (and the Closing Date)
shall be postponed until the first business day after the day when trading shall
have been fully resumed and reporting shall have been restored.
3.3 TRANSFER AGENT'S CERTIFICATE. The Acquired Fund shall cause its
transfer agent to deliver at the Closing a certificate of an authorized officer
stating that its records contain the names and addresses of the Acquired Fund
Shareholders and the number and percentage ownership of outstanding shares owned
by each such shareholder immediately prior to the Closing. The Acquiring Fund
shall issue and deliver, or cause its transfer agent, to issue and deliver, to
the Secretary of the Trust a confirmation evidencing the Acquiring Fund Shares
to be credited on the Closing Date or provide evidence satisfactory to the
Acquired Fund that such Acquiring Fund Shares have been credited to the Acquired
Fund's account on the books of the Acquiring Fund. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts and other documents as such other party or its
counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUND. The Acquired Fund represents and
warrants to the Acquiring Fund as follows:
(a) The Acquired Fund is a separate investment series of TFGT, a
statutory trust duly organized, validly existing, and in good standing under the
laws of Delaware.
(b) The Acquired Fund is a separate investment series of TFGT, which
is registered as an investment company classified as a management company of the
open-end type, and its registration with the Securities and Exchange Commission
(the "Commission") as an investment company under the 1940 Act, is in full force
and effect.
(c) The current prospectus and statement of additional information
of the Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act and the rules and regulations of the Commission thereunder and do not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(d) The Acquired Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in violation of any provision of TFGT's Declaration of Trust or By-Laws or of
any material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Acquired Fund is a party or by which it is bound.
(e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to it prior
to the Closing Date, except for liabilities, if any, to be discharged as
provided in paragraph 1.3 hereof.
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(f) Except as otherwise disclosed in writing to and accepted by the
Acquiring Fund, no litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its knowledge
threatened against the Acquired Fund or any of its properties or assets, which,
if adversely determined, would materially and adversely affect its financial
condition, the conduct of its business, or the ability of the Acquired Fund to
carry out the transactions contemplated by this Agreement. The Acquired Fund
knows of no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any order,
decree, or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the transactions
herein contemplated.
(g) The audited financial statements of the Acquired Fund at
September 30, 2010 are in accordance with generally accepted accounting
principles consistently applied, and such statements (copies of which have been
furnished to the Acquiring Fund) fairly reflect the financial condition of the
Acquired Fund as of such date, and there are no known contingent liabilities of
the Acquired Fund as of such date not disclosed therein.
(h) Since September 30, 2010, there has not been any material
adverse change in the Acquired Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquired Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes of this subparagraph (h), a
decline in the net asset value of the Acquired Fund shall not constitute a
material adverse change.
(i) At the Closing Date, all federal and other tax returns and
reports of the Acquired Fund required by law to have been filed by such date
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid, or provision shall have been made for the
payment thereof. To the best of the Acquired Fund's knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such
returns.
(j) For each fiscal year of its operation, the Acquired Fund has met
the requirements of Subchapter M of the Code for qualification and treatment as
a regulated investment company and has distributed in each such year all net
investment income and realized capital gains.
(k) The Acquired Fund is not under the jurisdiction of a court in a
"Title 11 or similar case" (within the meaning of Section 368(a)(3)(A) of the
Code);
(l) All issued and outstanding shares of the Acquired Fund are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable by the Acquired Fund. All of the issued and outstanding
shares of the Acquired Fund will, at the time of the Closing Date, be held by
the persons and in the amounts set forth in the records of the transfer agent as
provided in paragraph 3.3. The Acquired Fund does not have outstanding any
options, warrants, or other rights to subscribe for or purchase any of the
Acquired Fund shares, nor is there outstanding any security convertible into any
of the Acquired Fund shares.
(m) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to the
Acquiring Fund pursuant to paragraph 1.2 and full right, power, and authority to
sell, assign, transfer, and deliver such assets hereunder, and, upon delivery
and payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund and accepted by the Acquiring Fund.
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(n) The execution, delivery, and performance of this Agreement have
been duly authorized by all necessary action on the part of the Acquired Fund
and, subject to approval by the Acquired Fund's shareholders, this Agreement
constitutes a valid and binding obligation of the Acquired Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights and to general equity principles.
(o) The information furnished by the Acquired Fund for use in
no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated hereby is accurate and complete in all material
respects and complies in all material respects with federal securities and other
laws and regulations thereunder applicable thereto.
(p) The Acquired Fund has provided the Acquiring Fund with
information reasonably necessary for the preparation of a prospectus, which
included the proxy statement of the Acquired Fund (the "Prospectus/Proxy
Statement"), all of which was included in a Registration Statement on Form N-14
of the Acquiring Fund (the "Registration Statement"), in compliance with the
1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act") and
the 1940 Act in connection with the meeting of the shareholders of the Acquired
Fund to approve this Agreement and the transactions contemplated hereby. The
Prospectus/Proxy Statement included in the Registration Statement (other than
information therein that relates to the Acquiring Fund and any other fund
described therein other than the Acquired Fund) does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring Fund represents
and warrants to the Acquired Fund as follows:
(a) The Acquiring Fund is a separate investment series of TST, a
business trust, duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Massachusetts.
(b) The Acquiring Fund is a separate investment series of TST, which
is registered as an investment company classified as a management company of the
open-end type, and its registration with the Commission as an investment company
under the 1940 Act is in full force and effect.
(c) The current prospectus and statement of additional information,
as of the date of the Prospectus/Proxy Statement, of the Acquiring Fund conform
in all material respects to the applicable requirements of the 1933 Act and the
1940 Act and the rules and regulations of the Commission thereunder and do not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
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(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of TST's Declaration
of Trust or By-Laws or of any material agreement, indenture, instrument,
contract, lease, or other undertaking to which the Acquiring Fund is a party or
by which it is bound.
(e) Except as otherwise disclosed in writing to the Acquired Fund
and accepted by the Acquired Fund, no litigation, administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially and
adversely affect its financial condition and the conduct of its business or the
ability of the Acquiring Fund to carry out the transactions contemplated by this
Agreement. The Acquiring Fund knows of no facts that might form the basis for
the institution of such proceedings and is not a party to or subject to the
provisions of any order, decree, or judgment of any court or governmental body
that materially and adversely affects its business or its ability to consummate
the transactions contemplated herein.
(f) The audited financial statements of the Acquiring Fund at March
31, 2010 and the unaudited financial statements of the Acquiring Fund at
September 30, 2010 are in accordance with generally accepted accounting
principles consistently applied, and such statements (copies of which have been
furnished to the Acquired Fund) fairly reflect the financial condition of the
Acquiring Fund as of such date, and there are no known contingent liabilities of
the Acquiring Fund as of such date not disclosed therein.
(g) Since September 30, 2010, there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquired Fund. For the purposes of this subparagraph (g), a
decline in the net asset value of the Acquiring Fund shall not constitute a
material adverse change.
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed by such date
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid or provision shall have been made for the
payment thereof. To the best of the Acquiring Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with respect to
such returns.
(i) For each fiscal year of its operation, the Acquiring Fund has
met the requirements of Subchapter M of the Code for qualification and treatment
as a regulated investment company and has distributed in each such year all net
investment income and realized capital gains.
(j) All issued and outstanding Acquiring Fund Shares are, and at the
Closing Date will be, duly and validly issued and outstanding, fully paid and
non-assessable. The Acquiring Fund does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is there outstanding any security convertible into any Acquiring
Fund Shares.
(k) The execution, delivery, and performance of this Agreement have
been duly authorized by all necessary action on the part of the Acquiring Fund,
and this Agreement constitutes a valid and binding obligation of the Acquiring
Fund enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights and to general equity principles.
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(l) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement will, at the Closing Date, have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable.
(m) The information furnished by the Acquiring Fund for use in
no-action letters, applications for orders, registration statements, proxy
materials, and other documents that may be necessary in connection with the
transactions contemplated hereby is accurate and complete in all material
respects and complies in all material respects with federal securities and other
laws and regulations applicable thereto.
(n) The Prospectus/Proxy Statement included in the Registration
Statement (only insofar as it relates to the Acquiring Fund) does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading.
(o) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act,
and such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund
each will operate its business in the ordinary course between the date hereof
and the Closing Date, it being understood that such ordinary course of business
will include customary dividends and distributions.
5.2 APPROVAL BY SHAREHOLDERS. The Trust will call a meeting of the
shareholders of the Acquired Fund to consider and act upon this Agreement and to
take all other action necessary to obtain approval of the transactions
contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
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5.6 TAX-FREE REORGANIZATION. It is the intention of the parties that the
transaction will qualify as a reorganization within the meaning of Section
368(a)(1)(C) of the Code. Except as otherwise expressly provided in this
Agreement, neither TFGT, TST, the Acquired Fund nor the Acquiring Fund shall
take any action or cause any action to be taken (including without limitation
the filing of any tax return) that is inconsistent with such treatment or
results in the failure of the transaction to qualify as a reorganization within
the meaning of Section 368(a) of the Code. At or prior to the Closing Date, the
parties to this Agreement will take such reasonable action, or cause such action
to be taken, as is reasonably necessary to enable Pepper Hamilton LLP to render
the tax opinion contemplated in this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations and warranties of the Acquiring Fund contained in
this Agreement shall be true and correct as of the date hereof and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date, and the Acquiring Fund shall have delivered to the Acquired Fund a
certificate executed in its name by TST's President or Vice President, in form
and substance reasonably satisfactory to the Acquired Fund and dated as of the
Closing Date, to such effect and as to such other matters as the Acquired Fund
shall reasonably request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquired Fund contained in
this Agreement shall be true and correct as of the date hereof and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date, and the Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by TFGT's President or Vice
President, in form and substance satisfactory to the Acquiring Fund and dated as
of the Closing Date, to such effect and as to such other matters as the
Acquiring Fund shall reasonably request.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer or Assistant Treasurer of TFGT.
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ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of TFGT's Agreement and
Declaration of Trust, By-Laws, the 1940 Act and other applicable law and
certified copies of the resolutions evidencing such approval shall have been
delivered to the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund or the Acquired Fund may waive the
conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, nor instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act and no action, suit or
other proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions contemplated
herein.
8.3 All required consents of other parties and all other consents, orders,
and permits of federal, state and local regulatory authorities (including those
of the Commission and of state Blue Sky securities authorities, including any
necessary "no-action" positions of and exemptive orders from such federal and
state authorities) to permit consummation of the transactions contemplated
hereby shall have been obtained, except where failure to obtain any such
consent, order, or permit would not involve a risk of a material adverse effect
on the assets or properties of the Acquiring Fund or the Acquired Fund, provided
that either party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness of the Registration
Statement shall have been issued and, to the best knowledge of the parties
hereto, no investigation or proceeding for that purpose shall have been
instituted or be pending, threatened or contemplated under the 1933 Act.
8.5 The Acquired Fund shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to the Acquired Fund Shareholders all of the Acquired Fund's investment company
taxable income for all taxable periods ending on the Closing Date (computed
without regard to any deduction for dividends paid) and all of the net capital
gains realized in all taxable periods ending on the Closing Date (after
reduction for any capital loss carryforward).
8.6 Each of the Acquiring Fund and the Acquired Fund shall have received a
favorable opinion of Pepper Hamilton LLP substantially to the effect that, for
federal income tax purposes:
(a) The acquisition by the Acquiring Fund of all of the assets of
the Acquired Fund solely in exchange for the Acquiring Fund's assumption of
certain of the liabilities of the Acquired Fund and the issuance of the
Acquiring Fund Shares, followed by the distribution by the Acquired Fund in
liquidation of such Acquiring Fund Shares to the Acquired Fund Shareholders in
exchange for their Acquired Fund Shares, all as provided in the Agreement, will
constitute a reorganization within the meaning of Section 368(a) of the Code,
and the Acquired Fund and the Acquiring Fund each will be "a party to a
reorganization" within the meaning of Section 368(b) of the Code;
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(b) Under Code Section 361, no gain or loss will be recognized by
the Acquired Fund (i) upon the transfer of its assets to the Acquiring Fund
solely in exchange for the Acquiring Fund Shares and the assumption by the
Acquiring Fund of certain of the liabilities of the Acquired Fund or (ii) upon
the distribution of the Acquiring Fund Shares by the Acquired Fund to the
Acquired Fund Shareholders in liquidation, as contemplated in the Agreement
(c) Under Code Section 1032, no gain or loss will be recognized by
the Acquiring Fund upon the receipt of the assets of the Acquired Fund solely in
exchange for the assumption of the liabilities of the Acquired Fund and the
issuance of the Acquiring Fund Shares as contemplated in the Agreement;
(d) Under Code Section 362(b), the tax basis of the assets of the
Acquired Fund acquired by the Acquiring Fund will be the same as the tax basis
of such assets in the hands of the Acquired Fund immediately prior to the
Reorganization;
(e) Under Code Section 1223(2), the holding periods of the assets of
the Acquired Fund in the hands of the Acquiring Fund will include the periods
during which such assets were held by the Acquired Fund;
(f) Under Code Section 354, no gain or loss will be recognized by
the Acquired Fund Shareholders upon the exchange of all of their Acquired Fund
Shares for the Acquiring Fund Shares in the Reorganization;
(g) Under Code Section 358, the aggregate tax basis of the Acquiring
Fund Shares to be received by each Acquired Fund Shareholder pursuant to the
Reorganization will be the same as the aggregate tax basis of the Acquired Fund
Shares exchanged therefore;
(h) Under Code Section 1223(1), an Acquired Fund Shareholder's
holding period for the Acquiring Fund Shares to be received will include the
period during which the Acquired Fund Shares exchanged therefor were held,
provided that the Acquired Fund Shareholder held the Acquired Fund Shares as a
capital asset on the date of the Reorganization.
No opinion will be expressed as to (1) the effect of the Reorganization on
(A) the Acquired Fund or the Acquiring Fund with respect to any asset as to
which any unrealized gain or loss is required to be recognized for U.S. federal
income tax purposes at the end of a taxable year (or on the termination or
transfer thereof) under a mark-to-market system of accounting and (B) any
Acquired Fund Shareholder or Acquiring Fund shareholder that is required to
recognize unrealized gains and losses for U.S. federal income tax purposes under
a mark-to-market system of accounting, or (C) the Acquired Fund or the Acquiring
Fund with respect to any stock held in a passive foreign investment company as
defined in Section 1297(a) of the Code or (2) any other federal tax issues
(except those set forth above) and all state, local or foreign tax issues of any
kind.
Such opinion shall be based on customary assumptions, limitations and such
representations as Pepper Hamilton LLP may reasonably request, and the Acquired
Fund and Acquiring Fund will cooperate to make and certify the accuracy of such
representations. Such opinion may contain such assumptions and limitations as
shall be in the opinion of such counsel appropriate to render the opinions
expressed therein. Notwithstanding anything herein to the contrary, neither the
Acquiring Fund nor the Acquired Fund may waive the conditions set forth in this
paragraph 8.6.
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ARTICLE IX
EXPENSES
9.1 Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by the Acquired Fund and
the Acquiring Fund, whether incurred before or after the date of this Agreement,
will be borne by Touchstone Advisors, Inc., the investment advisor to the
Trusts. Such expenses include, without limitation, (a) expenses incurred in
connection with the entering into and the carrying out of the provisions of this
Agreement; (b) expenses associated with the preparation and filing of the
Registration Statement under the 1933 Act covering the Acquiring Fund Shares to
be issued pursuant to the provisions of this Agreement; (c) registration or
qualification fees and expenses of preparing and filing such forms as are
necessary under applicable state securities laws to qualify the Acquiring Fund
Shares to be issued in connection herewith in each state in which the Acquired
Fund Shareholders are residents as of the date of the mailing of the
Prospectus/Proxy Statement to such shareholders; (d) postage; (e) printing; (f)
accounting fees; (g) legal fees; and (h) solicitation costs of the transaction.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Acquired Fund agree that neither party has
made any representation, warranty or covenant not set forth herein and that this
Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Acquired Fund. In addition, either the Acquiring Fund or
the Acquired Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
(a) of a breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to the Closing Date, if
not cured within 30 days; or
(b) a condition herein expressed to be precedent to the obligations
of the terminating party has not been met and it reasonably appears that it will
not or cannot be met.
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of the Acquiring
Fund, the Acquired Fund, the Trusts, or its Trustees or officers, to the other
party, but Touchstone Advisors, Inc. shall bear the expenses incurred by it
incidental to the preparation and carrying out of this Agreement as provided in
paragraph 9.1.
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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 Trusts; provided, however, that following the meeting of shareholders of the
Acquired Fund pursuant to paragraph 5.2 of this Agreement, no such amendment may
have the effect of changing the provisions for determining the number of the
Acquiring Fund Shares to be issued to the Acquired Fund Shareholders under this
Agreement to the detriment of such Acquired Fund Shareholders without their
further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the conflicts of
laws provisions thereof.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm, or corporation, other than the parties hereto and their respective
successors and permitted assigns, any rights or remedies under or by reason of
this Agreement.
13.5 With respect to TST and TFGT, the names used herein refer
respectively to the trusts created and, as the case may be, the Trustees, as
trustees but not individually or personally, acting from time to time under
organizational documents filed in Massachusetts and Delaware, respectively,
which are hereby referred to and are also on file at the principal offices of
TST and TFGT. The obligations of TST and TFGT entered into in the name or on
behalf thereof by any of the Trustees, representatives or agents of the TST and
TFGT, are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of TST and TFGT
personally, but bind only TST or TFGT property, as applicable, and all persons
dealing with the Acquired Fund and the Acquiring Fund must look solely to the
trust property belonging to the Acquired Fund and the Acquiring Fund for the
enforcement of any claims against the Acquired Fund and the Acquiring Fund,
respectively.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
TOUCHSTONE FUNDS GROUP TRUST ON BEHALF OF
HEALTHCARE AND BIOTECHNOLOGY FUND
By:
-------------------------------------
Name: Jill T. McGruder
Title: President
TOUCHSTONE STRATEGIC TRUST ON BEHALF OF
LARGE CAP GROWTH FUND
By:
-------------------------------------
Name: Jill T. McGruder
Title: President
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