November 18, 1998
TIP Funds
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, Xxxxxxxxxxxx 19456
TIP Institutional Funds
Xxx Xxxxxxx Xxxxxx Xxxxx
Xxxx, Xxxxxxxxxxxx 00000
Re: AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN TIP INSTITUTIONAL FUNDS
AND TIP FUNDS, ON BEHALF OF ITS TIP TARGET SELECT EQUITY FUNDS AND PENN
CAPITAL SELECT FINANCIAL SERVICES FUNDS, ON BEHALF OF ITS PREMIER CORE
EQUITY AND GLOBAL FINANCIAL SERVICES FUNDS
Ladies and Gentlemen:
We have acted as counsel to TIP Institutional Funds, a Delaware business trust,
in connection with the execution and delivery of the draft Agreement and Plan of
Reorganization (the "Agreement"), dated as of November 6, 1998, by TIP
Institutional Funds, on behalf of its Premier Core Equity and Global Financial
Services Funds, relating to the transfer of all the assets and liabilities of
the TIP Funds TIP Target Select Equity and Penn Capital Financial Services Funds
(the "Acquired Portfolios"), in exchange for shares of the Premier Core Equity
Fund and Global Financial Services Fund (the "Acquiring Portfolios") followed by
the distribution of such Shares (the "Acquiring Portfolios' Shares") to the
holders of shares of the Acquired Portfolio ("Acquired Portfolios' Shares") in
exchange for such Acquired Portfolios' Shares in complete liquidation of such
Acquired Portfolios (the "Reorganization"), pursuant to the Agreement. This
opinion letter is delivered to you pursuant to Section 8(e) of the Agreement.
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Agreement.
Xxxxxx, Xxxxx & Xxxxxxx LLP
November 18, 1998
Page 2
In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Agreement, and (ii) such other documents as we have deemed necessary or
appropriate in order to enable us to render the opinion 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, conformed or photostatic copies and the authenticity of the
originals of such copies. Our opinion is based in part on the facts set forth
below. We have not undertaken an independent investigation or verification of
these facts or of the information set forth either in the aforementioned
documents or in other documents that we have reviewed.
1. The Reorganization will be consummated in compliance with the material
terms of the Agreement, and none of the material terms and conditions
therein have been waived or modified and neither party has any plan or
intention to waive or modify any such material condition.
2. The fair market value of the Acquiring Portfolios' Shares to be
received by each shareholder of the Acquired Portfolios in the
Reorganization will be approximately equal to the fair market value of
the shares in the Acquired Portfolios surrendered and exchanged
therefor.
3. To the knowledge of the Acquired Portfolios there is no plan or
intention on the part of any shareholder of the Acquired Portfolios to
sell, exchange or otherwise dispose of a number of Shares received in
the transaction that would reduce the number of Acquiring Portfolios'
Shares held by the shareholders of the Acquired Portfolios to a number
of shares having a value, as of the date of the Reorganization equal
to less than 50 percent of the value of all the formerly outstanding
Acquired Portfolios' Shares.
4. No consideration other than the Acquiring Portfolios' Shares and the
assumption by the Acquiring Portfolios of the stated liabilities of
the Acquired Portfolios will be issued in exchange for shares of
common stock in the Acquired Portfolios in the Reorganization.
5. The Acquiring Portfolios have no plan or intention to sell additional
shares of beneficial interest in the Acquiring Portfolios or to redeem
or otherwise reacquire any of the Acquiring Portfolios' Shares issued
in the Reorganization other than in the ordinary course of their
business as regulated investment companies.
Xxxxxx, Xxxxx & Xxxxxxx LLP
November 18, 1998
Page 3
6. The Acquiring Portfolios have no plan or intention to sell or
otherwise dispose of any of the Acquired Portfolios' assets to be
acquired by them in the Reorganization except for dispositions made in
the ordinary course of their business as regulated investment
companies.
7. Following the Reorganization, the Acquiring Portfolios will continue
the historic business of the Acquired Portfolios or use a significant
portion of the Acquired Portfolios' assets in their business.
8. Immediately following consummation of the Reorganization, the
Acquiring Portfolios will possess the same liabilities as those
possessed by the Acquired Portfolios immediately prior to the
Reorganization. The fair market value of the assets of the Acquired
Portfolios acquired by the Acquiring Portfolios will exceed the
liabilities of the Acquired Portfolios assumed by the Acquiring
Portfolios plus the amount of liabilities, if any, to which the
acquired assets are subject.
9. There is no intercorporate indebtedness existing between the Acquiring
Portfolios and the Acquired Portfolios that was issued, acquired, or
will be settled at a discount.
10. The Acquiring Portfolios will meet the requirements of Subchapter M of
the Internal Revenue Code of 1986 for qualification and treatment as
regulated investment companies.
11. The Acquiring Portfolios do not own nor will they acquire prior to the
consummation of the Reorganization any shares of common stock in the
Acquired Portfolios.
Our opinion summarizes certain Federal income tax consequences of the
Reorganization to holders of shares in the Acquired Portfolios (individually, a
"Shareholder" and, collectively, the "Shareholders"). Our opinion does not
address all aspects of Federal income taxation that may be relevant to
particular Shareholders and may not be applicable to Shareholders who are not
citizens or residents of the United States. Further, our opinion does not
address the effect of any applicable foreign, state, local or other tax laws.
Xxxxxx, Xxxxx & Xxxxxxx LLP
November 18, 1998
Page 4
In rendering our opinion, we have considered the applicable provisions of the
Internal Revenue Code of 1986 (the "Code"), Treasury Regulations, pertinent
judicial authorities, interpretive rulings of the Internal Revenue Service and
such other authorities as we have considered relevant.
Based upon and subject to the foregoing, we are of the opinion that the
Reorganization will, under current law, constitute a tax-free reorganization
under Section 368(a) of the Code, and that the Acquired Portfolios and Acquiring
Portfolios will each be a party to the reorganization within the meaning of
Section 368(b) of the Code.
The Reorganization, as a tax-free reorganization, will have the following
Federal income tax consequences for the Shareholders, the Acquired Portfolios
and the Acquiring Portfolios:
1. No gain or loss will be recognized to the Acquired Portfolios upon the
transfer of their assets in exchange solely for the Acquiring
Portfolios Shares and the assumption by the Acquiring Portfolios of
the Acquired Portfolios' stated liabilities;
2. No gain or loss will be recognized to the Acquiring Portfolios on
their receipt of the Acquired Portfolios' assets in exchange for the
Acquiring Portfolios' Shares and the assumption by the Acquiring
Portfolios of the Acquired Portfolios' liabilities;
3. The basis of an Acquired Portfolio's assets in the Acquiring
Portfolios' hands will be the same as the basis of those assets in the
Acquired Portfolios' hands immediately before the conversion;
4. The Acquiring Portfolios' holding period for the assets transferred to
the Acquiring Portfolios by the Acquired Portfolios will include the
holding period of those assets in the Acquired Portfolios' hands
immediately before the conversion;
5. No gain or loss will be recognized to the Acquired Portfolios on the
distribution of the Acquiring Portfolios' Shares to the Acquired
Portfolios' shareholders in exchange for its Acquired Portfolios'
Shares;
6. No gain or loss will be recognized to the Acquired Portfolios'
shareholders as a result of the Acquired Portfolios' distribution of
Xxxxxx, Xxxxx & Xxxxxxx LLP
November 18, 1998
Page 5
Acquiring Portfolios' Shares to the Acquired Portfolios' shareholders
in exchange for the Acquired Portfolios' shareholders' Acquired
Portfolios' Shares;
7. The basis of the Acquiring Portfolios' Shares received by the Acquired
Portfolios' shareholders will be the same as the adjusted basis of
that Acquired Portfolios' shareholders' Acquired Portfolios' Shares
surrendered in exchange therefor; and
8. The holding period of the Acquiring Portfolios' Shares received by the
Acquired Portfolios' shareholders will include the Acquired
Portfolios' shareholders' holding period for the Acquired Portfolios'
shareholders' Acquired Portfolios' Shares surrendered in exchange
therefor, provided that said Acquired Portfolios' Shares were held as
capital assets on the date of the conversion.
Except as set forth above, we express no opinion as to the tax consequences to
any party, whether Federal, state, local or foreign, of the Reorganization or
the Agreement or of any transactions related to the Reorganization or the
Agreement or contemplated by the Reorganization or the Agreement. This opinion
is being furnished to you on behalf of the Acquired Portfolios in connection
with the Reorganization and the Agreement and solely for your benefit in
connection therewith and may not be used or relied upon for any other purpose
and may not be circulated, quoted or otherwise referred to for any other purpose
without our express written consent.
Very truly yours,
/s/ Xxxxxx, Xxxxx & Xxxxxxx LLP
