[XXXXX, XXXXX, XXXX & MAW LETTERHEAD]
October 3, 2002
To the Persons Listed on
Schedule I Attached hereto
Re: Agreement and Plan of Reorganization for the Exchange of Stock of
Xxxxxx Xxxxxxx High Income Advantage Trust III for Substantially
All of the Assets of Xxxxxx Xxxxxxx High Yield Securities Inc.,
dated as of July 25, 2002 (the "Reorganization Agreement")
Ladies and Gentlemen:
We have acted as counsel to Xxxxxx Xxxxxxx High Income Advantage Trust III
("HIAT III"), a Massachusetts business trust, and Xxxxxx Xxxxxxx High Yield
Securities Inc. ("High Yield"), a Maryland corporation, in connection with the
proposed transfer of substantially all of the assets of HIAT III to High Yield
and certain other transactions related thereto pursuant to and in accordance
with the terms of the Reorganization Agreement (the "Reorganization"). You have
requested that we provide an opinion regarding the treatment of the
Reorganization under the Internal Revenue Code of 1986, as amended (the
"Code"), and the accuracy of the tax disclosures in the proxy statement and
prospectus (the "Proxy Statement/Prospectus") accompanying the Form N-14
Registration Statement.
In connection with rendering these opinions, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
Reorganization Agreement, (ii) the Form N-14 Registration Statement for the
Reorganization, and the Proxy Statement/Prospectus and other documents,
exhibits, attachments and schedules contained therein, (iii) written
representations of Xxxxxx Xxxxxxx Investment Advisors Inc. ("the "Advisor")
concerning certain facts underlying and relating to the Reorganization set
forth in a letter dated October 3, 2002, and (iv) such other documents and
materials as we have deemed necessary or appropriate for purposes of the
opinions set forth below. In our examination, we have assumed the genuineness
of all signatures, the legal capacity of all natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified or photostatic copies,
and the authenticity of the originals of such copies. We have not made an
independent investigation of the facts set forth either in the Form N-14
Registration Statement, the Reorganization Agreement or such other documents
that we have examined. We consequently have assumed in rendering these opinions
that the information presented in such documents or otherwise furnished to us
accurately and completely describes in all material respects all facts relevant
to the Reorganization.
We have also assumed for purposes of rendering our opinions (i) the
accuracy of, and material compliance with, the representations of the Advisor
set forth in the letter referred to above, (ii) the accuracy of, and material
compliance with, the representations, warranties, covenants and agreements of
HIAT III and High Yield made in the Reorganization Agreement, and (iii) that
there are no agreements or understandings other than those of which we have
been informed that would affect our conclusions set forth below.
The opinions set forth below are based on the Code, the legislative
history with respect thereto, rules and regulations promulgated thereunder, and
published rulings, court decisions and administrative authorities issued with
respect to all of the foregoing, all as in effect and existing on the date
hereof, and all of which are subject to change at any time, possibly on a
retroactive basis. In addition, there can be no assurance that positions
contrary to those stated in our opinions may not be asserted by the Internal
Revenue Service.
Any change occurring after the date hereof in, or a variation from, any of
the foregoing factual or legal bases for our opinions could affect the
conclusions set forth below.
In addition, the opinions expressed herein are given as of the date hereof
and we express no obligation to advise you of any changes in the law or events
that may hereafter come to our attention that could affect our opinions set
forth below.
Based on the foregoing, we are of the opinions that, for federal income
tax purposes:
1. The summaries of United States federal income tax consequences set
forth in the Proxy Statement/Prospectus under the headings Synopsis -- Tax
Consequences of the Reorganization, The Reorganization -- The Board's
Consideration and The Reorganization -- Tax Aspects of the Reorganization are
accurate in all material respects as to matters of law and legal conclusions.
2. The transfer of HIAT III's assets in exchange for High Yield Shares(1)
and the assumption by High Yield of certain stated liabilities of HIAT III
followed by the distribution by HIAT III of High Yield Shares to the HIAT III
Shareholders in exchange for their HIAT III shares pursuant to and in
accordance with the terms of the Reorganization Agreement will constitute a
"reorganization" within the meaning of section 368(a)(1)(C) of the Code, and
HIAT III and High Yield will each be a "party to a reorganization" within the
meaning of section 368(b) of the Code.
3. No gain or loss will be recognized by High Yield upon receipt of the
assets of HIAT III solely in exchange for High Yield Shares and the assumption
by High Yield of the stated liabilities of HIAT III.
4. No gain or loss will be recognized by HIAT III upon the transfer of the
assets of HIAT III to High Yield in exchange for High Yield Shares and the
assumption by High Yield of the stated liabilities or upon the distribution of
High Yield Shares to the HIAT III Shareholders in exchange for their HIAT III
shares.
5. No gain or loss will be recognized by the HIAT III Shareholders upon
the exchange of the HIAT III shares for High Yield Shares.
6. The aggregate tax basis for the High Yield Shares received by each HIAT
III Shareholder pursuant to the Reorganization will be the same as the
aggregate tax basis of the HIAT III shares held by each such HIAT III
Shareholder immediately prior to the Reorganization.
7. The holding period of the High Yield Shares to be received by each HIAT
III Shareholder will include the period during which the HIAT III shares
surrendered in exchange therefore were held (provided such HIAT III shares are
held as capital assets on the date of the Reorganization).
8. The tax basis of the assets of HIAT III acquired by High Yield will be
the same as the tax basis of such assets to HIAT III immediately prior to the
Reorganization.
9. The holding period of the assets of HIAT III in the hands of High Yield
will include the period during which those assets were held by HIAT III.
These opinions are being provided to you solely in connection with the
filing of the Registration Statement for the Reorganization. This opinion may
not be relied upon by you for any other purpose or relied upon by or furnished
to any other person without our prior written consent.
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1 Capitalized terms used herein without definition have the meanings ascribed
to them in the Reorganization Agreement.
2
We hereby consent to the filing of this opinion as an exhibit to the Proxy
Statement/Prospectus and to all references to this firm under the headings
Synopsis -- Tax Consequences of the Reorganization and The Reorganization --
Tax Aspects of the Reorganization in the Proxy Statement/Prospectus.
Sincerely,
/s/ Xxxxx, Xxxxx, Xxxx & Maw
----------------------------
XXXXX, XXXXX, XXXX & MAW
JRB/KRA
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SCHEDULE I
Xxxxxx Xxxxxxx High Income Advantage Trust III
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Xxxxxx Xxxxxxx High Yield Securities Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
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