Exhibit 99.12
[FORM OF OPINION OF XXXXXXX XXXX LLP]
__________ ___, 2001
PaineWebber Municipal Series MFS Series Trust III
00 Xxxx 00xx Xxxxxx 000 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 Xxxxxx, XX 00000
Ladies and Gentlemen:
This opinion is furnished to you pursuant to paragraph 8.6 of the Agreement and
Plan of Reorganization, dated as of December ___, 2000 (the "Agreement"),
between PaineWebber Municipal Series, a Massachusetts business trust, on behalf
of PaineWebber Municipal High Income Fund, a series thereof (the "Acquired
Fund"), and MFS Series Trust III, a Massachusetts business trust, on behalf of
MFS Municipal High Income Fund, a series thereof (the "Surviving Fund"). The
Agreement provides for the acquisition of all of the assets of the Acquired Fund
by the Surviving Fund in exchange for (a) the assumption of all of the
liabilities of the Acquired Fund by the Surviving Fund and (b) the issuance and
delivery by the Surviving Fund to the Acquired Fund, for distribution (in
accordance with paragraph 1.5 of the Agreement) pro rata to the Acquired Fund's
shareholders of record in exchange for their shares of beneficial interest in
the Acquired Fund ("Acquired Fund Shares") and in complete liquidation of the
Acquired Fund, of a number of shares of beneficial interest of the Surviving
Fund ("Surviving Fund Shares") having an aggregate net asset value equal to the
value of the assets, less the amount of the liabilities, the Acquired Fund so
transferred to the Surviving Fund (the "Reorganization"). All capitalized terms
not otherwise defined herein have the meanings ascribed to them in the
Agreement.
In connection with this opinion we have examined and relied upon the originals
or copies, certified or otherwise identified to us to our satisfaction, of the
Agreement, the Registration Statement on Form N-14 filed on or about December 1,
2000 with the Securities and Exchange Commission by MFS Series Trust III in
connection with the Reorganization, and related documents (collectively, the
"Documents"). In that examination, we have assumed the genuineness of all
signatures, the authenticity and completeness of all documents purporting to be
originals (whether reviewed by us in original or copy form) and the conformity
to the originals of all documents purporting to be copies.
As to certain factual matters, we have relied with your consent upon, and our
opinion is limited by, the representations of the various parties set forth in
the Documents, and in certificates of each of PaineWebber Municipal Series and
MFS Series Trust III dated ___________ ___, 2001 and attached hereto as Exhibits
A and B (the "Certificates"). Our opinion assumes that (i) all representations
set forth in the Documents and in the Certificates will be true and correct in
all material respects as of the date of the Reorganization and (ii) the
Agreement will be implemented in accordance with its terms and consistent with
the representations set out in the Documents and Certificates. Our opinion is
limited solely to the provisions of the federal Internal Revenue Code as now in
effect (the "Code"), and the regulations, rulings, and interpretations thereof
in force as of this date. We assume no obligation to update our opinion to
reflect any changes in law or in the interpretation thereof that may hereafter
occur.
On the basis of and subject to the foregoing, we are of the opinion that:
1. For federal income tax purposes, the Reorganization will constitute a
reorganization under Section 368(a) of the Code, and the Surviving Fund
and the Acquired 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 by the Acquired Fund (a) upon the
transfer of all of its assets to the Surviving Fund solely in exchange for
Surviving Fund Shares and the assumption of the liabilities of the
Acquired Fund by the Surviving Fund or (b) upon the distribution to the
Acquired Fund shareholders of such Surviving Fund Shares pursuant to the
Agreement.
3. No gain or loss will be recognized by the Surviving Fund upon the receipt
of the assets of the Acquired Fund solely in exchange for Surviving Fund
Shares and the assumption of the liabilities of the Acquired Fund by the
Surviving Fund.
4. The basis of the assets of the Acquired Fund acquired by the Surviving
Fund will be, in each instance, the same as the basis of those assets in
the hands of the Acquired Fund immediately prior to the transfer.
5. The holding period of the assets of the Acquired Fund in the hands of the
Surviving Fund will include, in each instance, the holding period of such
assets in the hands of the Acquired Fund.
6. The shareholders of the Acquired Fund will not recognize gain or loss upon
the exchange of all of their Acquired Fund Shares solely for Surviving
Fund Shares as part of the Reorganization.
7. The basis of the Surviving Fund Shares to be received by each Acquired
Fund shareholder will be, in the aggregate, the same as the basis, in the
aggregate, of the Acquired Fund Shares surrendered by such shareholder in
exchange therefor.
8. The holding period of the Surviving Fund Shares to be received by the
Acquired Fund shareholders will include, in each instance, the holding
period of the Acquired Fund Shares surrendered in exchange therefor,
provided such Acquired Fund Shares were held as capital assets on the date
of the exchange.
This opinion is being delivered solely to you for your use in connection with
the referenced transaction, and may not be relied upon by any other person or
used for any other purpose.
Very truly yours,
XXXXXXX XXXX LLP
