XXXXXXXX RONON XXXXXXX & XXXXX, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone (000) 000-0000
Fax (000) 000-0000
September 26, 2002
Board of Directors
Xxxxxxxxx Emerging Markets Appreciation Fund, Inc.
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, XX 00000
Board of Trustees
Xxxxxxxxx Developing Markets Trust
000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, XX 00000
RE: AGREEMENT AND PLAN OF ACQUISITION (THE "PLAN") DATED AS OF MARCH 19,
2002, BY AND BETWEEN XXXXXXXXX EMERGING MARKETS APPRECIATION FUND,
INC., A CORPORATION INCORPORATED UNDER THE LAWS OF THE STATE OF
MARYLAND ("ACQUIRED FUND"), AND XXXXXXXXX DEVELOPING MARKETS TRUST
("ACQUIRING FUND"), A BUSINESS TRUST FORMED UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS
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Ladies and Gentlemen:
You have requested our opinion concerning certain federal income tax
consequences of the reorganization of the Acquired Fund (the "Reorganization"),
which will consist of: (i) the acquisition by the Acquiring Fund of
substantially all of the property, assets and goodwill of the Acquired Fund in
exchange solely for full and fractional shares of beneficial interest, par value
$0.01 per share, of the Acquiring Fund - Advisor Class ("Acquiring Fund
Shares"); (ii) the distribution of the Acquiring Fund Shares to the shareholders
of the Acquired Fund according to their respective interests in complete
liquidation of the Acquired Fund; and (iii) the dissolution of the Acquired Fund
as soon as is practicable after the closing date (the "Closing Date") of the
Reorganization all upon and subject to the terms and conditions of the Plan.
In rendering our opinion, we have reviewed and relied upon: (a) the Plan,
made as of the 19th day of March, 2002, by and between the Acquired Fund and the
Acquiring Fund; (b) the proxy materials provided to shareholders of the Acquired
Fund in connection with the Annual Meeting of Shareholders of the Acquired Fund
held on August 26, 2002; (c) certain representations concerning the
Reorganization made to us by the Acquired Fund and the Acquiring Fund in a
letter dated September 26, 2002 (the "Representation Letter"); (d) all other
documents, financial and other reports and corporate minutes we deemed relevant
or appropriate; and (e) such statutes, regulations, rulings and decisions as we
deemed material in rendering this opinion. All terms used herein, unless
otherwise defined, are used as defined in the Plan.
For purposes of this opinion, we have assumed that the Acquired Fund, on
the Closing Date, satisfies, and immediately following the Closing Date, the
Acquiring Fund will continue to satisfy, the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), for qualification as a
regulated investment company.
Based on the foregoing, and provided the Reorganization is carried out in
accordance with the applicable laws of The Commonwealth of Massachusetts and the
State of Maryland, the terms of the Plan and the statements in the
Representation Letter, it is our opinion that:
1. The acquisition by the Acquiring Fund of
substantially all of the assets of the Acquired Fund as provided for in the Plan
in exchange for the Acquiring Fund Shares, followed by the distribution by the
Acquired Fund to its shareholders of the Acquiring Fund Shares in complete
liquidation of the Acquired Fund, will qualify as a reorganization within the
meaning of Section 368(a)(1) of the Code, and the Acquired Fund and the
Acquiring Fund each will be a "party to the reorganization" within the meaning
of Section 368(b) of the Code.
2. No gain or loss will be recognized by the Acquired
Fund upon the transfer of substantially all of its assets to the Acquiring Fund
in exchange solely for the Acquiring Fund Shares pursuant to Section 361(a) and
Section 357(a) of the Code.
3. No gain or loss will be recognized by the Acquiring
Fund upon the receipt by it of substantially all of the assets of the Acquired
Fund in exchange solely for the Acquiring Fund Shares pursuant to Section
1032(a) of the Code.
4. No gain or loss will be recognized by the Acquired
Fund upon the distribution of the Acquiring Fund Shares to its shareholders in
complete liquidation of the Acquired Fund (in pursuance of the Plan) pursuant to
Section 361(c)(1) of the Code.
5. The basis of the assets of the Acquired Fund
received by the Acquiring Fund will be the same as the basis of these assets to
the Acquired Fund immediately prior to the exchange pursuant to Section 362(b)
of the Code.
6. The holding period of the assets of the Acquired
Fund received by the Acquiring Fund will include the period during which such
assets were held by the Acquired Fund pursuant to Section 1223(2) of the Code.
7. No gain or loss will be recognized by the
shareholders of the Acquired Fund upon the exchange of their shares in the
Acquired Fund ("Acquired Fund Shares") for the Acquiring Fund Shares (including
fractional shares to which they may be entitled) pursuant to Section 354(a) of
the Code.
8. The basis of the Acquiring Fund Shares received by
the shareholders of the Acquired Fund (including fractional shares to which they
may be entitled) will be the same as the basis of the Acquired Fund Shares
exchanged therefor pursuant to Section 358(a)(1) of the Code.
9. The holding period of the Acquiring Fund Shares
received by the shareholders of the Acquired Fund (including fractional shares
to which they may be entitled) will include the holding period of the Acquired
Fund Shares surrendered in exchange therefor, provided that the Acquired Fund
Shares were held as a capital asset on the Closing Date pursuant to Section
1223(1) of the Code.
10. The Acquiring Fund will succeed to and take into account,
as of the date of the transfer as defined in Section 1.381(b)-1(b) of the income
tax regulations issued by the United States Department of the Treasury (the
"Treasury Regulations"), the items of the Acquired Fund described in Section
381(c) of the Code, subject to the conditions and limitations specified in
Sections 381, 382, 383 and 384 of the Code and the Treasury Regulations.
Our opinion is based upon the Code, the applicable Treasury Regulations,
the present positions of the Internal Revenue Service (the "Service") as are set
forth in published revenue rulings and revenue procedures, present
administrative positions of the Service, and existing judicial decisions, all of
which are subject to change either prospectively or retroactively. We do not
undertake to make any continuing analysis of the facts or relevant law following
the Closing Date.
Our opinion is conditioned upon the performance by the Acquiring Fund and
the Acquired Fund of their undertakings in the Plan and the Representation
Letter. Our opinion is limited to the transactions incident to the
Reorganization described herein, and no opinion is rendered with respect to (i)
any other transaction or (ii) the effect, if any, of the Reorganization (and/or
the transactions incident thereto) on any other transaction and/or the effect,
if any, of any such other transaction on the Reorganization.
This opinion is being rendered to the Acquiring Fund and the Acquired Fund
and may be relied upon only by such funds and the shareholders of each. We
hereby consent to the use of this opinion as an exhibit to the Registration
Statement of the Acquiring Fund, and any amendments thereto, covering the
registration of the shares of the Acquiring Fund under the Securities Act of
1933, as amended.
Very truly yours,
STRADLEY, RONON, XXXXXXX & YOUNG, LLP
By:/s/ XXXXXXX X. XXXXXXX, III
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Xxxxxxx X. Xxxxxxx III, a Partner
