XXXXXXXX & WORCESTER
A Registered Limited Liability Partnership
0000 XXXXXXXXXXX XXXXXX, X.X.
WASHINGTON, D.C. 20036
TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000
000 XXXXX XXXXXX XXX XXXX XXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000 XXXXXX, XXXXXXXXXXXXX 02109
TELEPHONE: 000-000-0000 TELEPHONE: 000-000-0000
FACSIMILE: 000-000-0000 FACSIMILE: 000-000-0000
December 5, 1995
Evergreen Managed Bond Fund
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Fixed Income Fund
0 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Acquisition of Assets of Evergreen Managed Bond Fund
Ladies and Gentlemen:
You have asked for our opinion as to certain tax consequences of the
proposed acquisition of assets of Evergreen Managed Bond Fund ("Selling Fund"),
a series of Evergreen Investment Trust, a Massachusetts business trust, by the
Fixed Income Fund ("Acquiring Fund"), a series of The FFB Lexicon Fund, a
Massachusetts business trust, in exchange for voting shares of Acquiring Fund
(the "Reorganization").
In rendering our opinion, we have reviewed and relied upon the draft
Prospectus/Proxy Statement and associated form of Agreement and Plan of
Reorganization (the "Reorganization Agreement") expected to be filed with the
Securities and Exchange Commission on or about December 6, 1995. We have relied,
without independent verification, upon the factual statements made therein, and
assume that there will be no change in material facts disclosed therein between
the date of this letter and the date of closing of the Reorganization. We
further assume that the Reorganization will be carried out in accordance with
the Reorganization Agreement. We have also relied upon the following
representations, each of which has been made to us by officers of Evergreen
Investment Trust on behalf of Selling Fund or of The FFB Lexicon Fund on behalf
of Acquiring Fund:
A. The Reorganization will be consummated substantially as described in the
Reorganization Agreement.
B. Acquiring Fund will acquire from Selling Fund at least 90% of the fair
market value of the net assets and at least 70% of the fair market value of the
gross assets held by Selling Fund immediately prior to the Reorganization. For
purposes of this representation, assets of Selling Fund used to pay
reorganization expenses, cash retained to pay liabilities, and redemptions and
distributions (except for regular and normal distributions) made by Selling Fund
immediately preceding the transfer which are part of the plan of reorganization,
will be considered as assets held by Selling Fund immediately prior to the
transfer.
C. To the best of the knowledge of management of Selling Fund, there is no
plan or intention on the part of the shareholders of Selling Fund to sell,
exchange, or otherwise dispose of a number of Acquiring Fund shares received in
the Reorganization that would reduce the former Selling Fund shareholders'
ownership of Acquiring Fund shares to a number of shares having a value, as of
the date of the Reorganization (the "Closing Date"), of less than 50 percent of
the value of all of the formerly outstanding shares of Selling Fund as of the
same date. For purposes of this representation, Selling Fund shares exchanged
for cash or other property will be treated as outstanding Selling Fund shares on
the Closing Date. There are no dissenters' rights in the Reorganization, and no
cash will be exchanged for Selling Fund shares in lieu of fractional shares of
Acquiring Fund. Moreover, shares of Selling Fund and shares of Acquiring Fund
held by Selling Fund shareholders and otherwise sold, redeemed, or disposed of
prior or subsequent to the Reorganization will be considered in making this
representation, except for shares of Selling Fund or Acquiring Fund redeemed in
the ordinary course of business of Selling Fund or Acquiring Fund in accordance
with the requirements of section 22(e) of the Investment Company Act of 1940.
D. Selling Fund has not redeemed and will not redeem the shares of any of
its shareholders in connection with the Reorganization except to the extent
necessary to comply with its legal obligation to redeem its shares.
E. The management of Acquiring Fund has no plan or intention to redeem or
reacquire any of the Acquiring Fund shares to be received by Selling Fund
shareholders in connection with the Reorganization, except to the extent
necessary to comply with its legal obligation to redeem its shares.
F. The management of Acquiring Fund has no plan or intention to sell or
dispose of any of the assets of Selling Fund which will be acquired by Acquiring
Fund in the Reorganization, except for dispositions made in the ordinary course
of business, and to the extent necessary to enable Acquiring Fund to comply with
its legal obligation to redeem its shares.
G. Following the Reorganization, Acquiring Fund will continue the historic
business of Selling Fund in a substantially unchanged manner as part of the
regulated investment company business of Acquiring Fund, or will use a
significant portion of Selling Fund's historic business assets in a business.
H. There is no intercorporate indebtedness between Acquiring Fund and
Selling Fund.
I. Acquiring Fund does not own, directly or indirectly, and has not owned
in the last five years, directly or indirectly, any shares of Selling Fund.
Acquiring Fund will not acquire any shares of Selling Fund prior to the Closing
Date.
J. Acquiring Fund will not make any payment of cash or of property other
than shares to Selling Fund or to any shareholder of Selling Fund in connection
with the Reorganization.
K. Pursuant to the Reorganization Agreement, the shareholders of Selling
Fund will receive solely Acquiring Fund voting shares in exchange for their
voting shares of Selling Fund.
L. The fair market value of the Acquiring Fund shares to be received by the
Selling Fund shareholders will be approximately equal to the fair market value
of the Selling Fund shares surrendered in exchange therefor.
M. Subsequent to the transfer of Selling Fund's assets to Acquiring Fund
pursuant to the Reorganization Agreement, Selling Fund will distribute the
shares of Acquiring Fund, together with other assets it may have, in final
liquidation as expeditiously
as possible.
N. Selling 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 Internal Revenue
Code of 1986, as amended (the "Code").
O. Selling Fund is treated as a corporation for federal income tax purposes
and at all times in its existence has qualified as a regulated investment
company, as defined in Section 851 of the Code.
P. Acquiring Fund is treated as a corporation for federal income tax
purposes and at all times in its existence has qualified as a regulated
investment company, as defined in Section 851 of the Code.
Q. The sum of the liabilities of Selling Fund to be assumed by Acquiring
Fund and the expenses of the Reorganization does not exceed twenty percent of
the fair market value of the assets of Selling Fund.
R. The foregoing representations are true on the date of this letter and
will be true on the date of closing of the Reorganization.
Based on and subject to the foregoing, and our examination of the legal
authority we have deemed to be relevant, it is our opinion that for federal
income tax purposes:
1. The acquisition by Acquiring Fund of substantially all of the assets of
Selling Fund solely in exchange for voting shares of Acquiring Fund followed by
the distribution by Selling Fund of said Acquiring Fund shares to the
shareholders of Selling Fund in exchange for their Selling Fund shares will
constitute a reorganization within the meaning of Section 368(a)(1)(C) of the
Code, and Acquiring Fund and Selling Fund will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized to Selling Fund upon the transfer of
substantially all of its assets to Acquiring Fund solely in exchange for
Acquiring Fund voting shares and assumption by Acquiring Fund of certain
identified liabilities of Selling Fund, or upon the distribution of such
Acquiring Fund voting shares to the shareholders of Selling Fund in exchange for
all of their Selling Fund shares.
3. No gain or loss will be recognized by Acquiring Fund upon the receipt of
the assets of Selling Fund (including any cash retained initially by Selling
Fund to pay liabilities but later transferred) solely in exchange for Acquiring
Fund voting shares and assumption by Acquiring Fund of certain identified
liabilities of Selling Fund.
4. The basis of the assets of Selling Fund acquired by Acquiring Fund will
be the same as the basis of those assets in the hands of Selling Fund
immediately prior to the transfer, and the holding period of the assets of
Selling Fund in the hands of Acquiring Fund will include the period during which
those assets were held by Selling Fund.
5. The shareholders of Selling Fund will recognize no gain or loss upon the
exchange of all of their Selling Fund shares solely for Acquiring Fund voting
shares. Gain, if any, will be realized by Selling Fund shareholders who in
exchange for their Selling Fund shares receive other property or money in
addition to Acquiring Fund shares, and will be recognized, but not in excess of
the amount of cash and the value of such other property received. If the
exchange has the effect of the distribution of a dividend, then the amount of
gain recognized that is not in excess of the ratable share of undistributed
earnings and profits of Selling Fund will be treated as a dividend.
6. The basis of the Acquiring Fund voting shares to be received by the
Selling Fund shareholders will be the same as the basis of the Selling Fund
shares surrendered in exchange therefor.
7. The holding period of the Acquiring Fund voting shares to be received by
the Selling Fund shareholders will include the period during which the Selling
Fund shares surrendered in exchange therefor were held, provided the Selling
Fund shares were held as a capital asset on the date of the exchange.
This opinion letter is delivered to you in satisfaction of the requirements
of Paragraph 8.6 of the Reorganization Agreement. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement on Form N-14
and to use of our name and any reference to our firm in the Registration
Statement or in the Prospectus/Proxy Statement constituting a part thereof. In
giving such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/XXXXXXXX & WORCESTER LLP
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XXXXXXXX & WORCESTER LLP
