January 8, 1998
Xxxxxx Xxxxxxx Institutional Fund, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Re: Agreement and Plan of Reorganization
by and between MAS Funds and Xxxxxx Xxxxxxx Institutional Fund, Inc.
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Ladies and Gentlemen:
We have acted as counsel to MAS Funds, a Pennsylvania business trust, in
connection with the execution and delivery of the Agreement and Plan of
Reorganization (the "Agreement"), dated as of January 9, 1998, by and
between MAS Funds and Xxxxxx Xxxxxxx Institutional Fund, Inc. ("MSIF"), a
Maryland corporation, relating to the transfer of all the assets and liabilities
of the MSIF Small Cap Value Equity Fund and the MSIF Balanced Fund
(collectively, the "Acquired Funds"), in exchange for the assumption by the
corresponding series of the MAS Mid Cap Value Fund and the MAS Balanced Fund
(collectively, the "Acquiring Funds") of all or substantially all of the
liabilities of the Acquired Funds and units of beneficial interest of the
corresponding series of the Acquiring Funds ("Acquiring Funds Shares") followed
by the distribution of such Acquiring Funds Shares to the holders of shares of
common stock of the Acquired Funds ("Acquired Funds Shares") in exchange for
such Acquired Funds Shares in complete liquidation of the Acquired Funds (the
"Reorganization"), pursuant to the Agreement. This opinion letter is delivered
to you pursuant to Section 8(d) of the Agreement. Capitalized terms used but
not defined herein shall have the meanings assigned to them in the Agreement.
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
Xxxxxx Xxxxxxx Institutional Fund, Inc.
January 5, 1998
Page 2
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 Funds Shares to be received by
each Acquired Funds shareholder in the Reorganization will be
approximately equal to the fair market value of the shares of common
stock in the Acquired Funds surrendered and exchanged therefor.
3. To the knowledge of the Acquired Funds there is no plan or intention
on the part of any shareholder of the Acquired Funds to sell, exchange
or otherwise dispose of a number of Fund Shares received in the
transaction that would reduce the number of Acquiring Funds Shares
held by the shareholders of the Acquired Funds 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
Funds Shares.
4. No consideration other than the Acquiring Funds Shares and the
assumption by the Acquiring Funds of the stated liabilities of the
Acquired Funds will be issued in exchange for shares of common stock
in the Acquired Funds in the Reorganization.
5. The Acquiring Funds have no plan or intention to sell additional
shares of beneficial interest in the Acquiring Funds or to redeem or
otherwise reacquire any of the Acquiring Funds Shares issued in the
Reorganization other than in the ordinary course of their business as
regulated investment companies.
6. The Acquiring Funds have no plan or intention to sell or otherwise
dispose of any of the Acquired Funds 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 Funds will continue the
historic businesses of the Acquired Funds or use a significant portion
of the Acquired
Xxxxxx Xxxxxxx Institutional Fund, Inc.
January 5, 1998
Page 3
Funds' assets in business.
8. Immediately following consummation of the Reorganization, the
Acquiring Funds will possess the same liabilities as those possessed
by the Acquired Funds immediately prior to the Reorganization. The
fair market value of the assets of the Acquired Funds acquired by the
Acquiring Funds will exceed the liabilities of the Acquired Funds
assumed by the Acquiring Funds plus the amount of liabilities, if any,
to which the acquired assets are subject.
9. There is no intercorporate indebtedness existing between the Acquiring
Funds and the Acquired Funds that was issued, acquired, or will be
settled at a discount.
10. The Acquiring Funds will meet the requirements of Subchapter M of the
Internal Revenue Code of 1986 for qualification and treatment as a
regulated investment company.
11. The Acquiring Funds do not own nor have they ever owned shares of
common stock in the Acquired Funds.
Our opinion summarizes certain Federal income tax consequences of the
Reorganization to holders of shares of common stock in the Acquired Funds
(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.
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)(1)(C) of the Code, and that the Acquired Funds and
Acquiring Funds 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 Funds and the
Acquiring Funds:
Xxxxxx Xxxxxxx Institutional Fund, Inc.
January 5, 1998
Page 4
1. No gain or loss will be recognized to the Acquired Funds upon the
transfer of their assets in exchange solely for the Acquiring
Funds Shares and the assumption by the Acquiring Funds of the
corresponding Acquired Funds' stated liabilities;
2. No gain or loss will be recognized to the Acquiring Funds on
their receipt of the Acquired Funds' assets in exchange for the
Acquiring Funds Shares and the assumption by the Acquiring Funds
of the corresponding Acquired Funds' liabilities;
3. The basis of an Acquired Fund's assets in the corresponding
Acquiring Funds' hands will be the same as the basis of those
assets in the Acquired Funds' hands immediately before the
conversion;
4. The Acquiring Funds' holding period for the assets transferred to
the Acquiring Funds by the Acquired Funds will include the
holding period of those assets in the corresponding Acquired
Funds' hands immediately before the conversion;
5. No gain or loss will be recognized to the Acquired Funds on the
distribution of the Acquiring Funds Shares to the Acquired Funds'
shareholders in exchange for their Acquired Funds Shares;
6. No gain or loss will be recognized to the Acquired Funds'
shareholders as a result of the Acquired Funds' distribution of
Acquiring Funds Shares to the Acquired Funds' shareholders in
exchange for the Acquired Funds' shareholders' Acquired Funds
Shares;
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January 5, 1998
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7. The basis of the Acquiring Funds Shares received by the Acquired
Funds' shareholders will be the same as the adjusted basis of
that Acquired Funds' shareholders' Acquired Funds Shares
surrendered in exchange therefor; and
8. The holding period of the Acquiring Funds Shares received by the
Acquired Funds' shareholders will include the Acquired Funds'
shareholders' holding period for the Acquired Funds'
shareholders' Acquired Funds Shares surrendered in exchange
therefor, provided that said Acquired Funds 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 Acquiring Funds 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 & Bockius LLP
