[XXXXXX, XXXXX & XXXXXXX LLP LOGO APPEARS HERE]
February 26, 1999
The Arbor Fund
0 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN THE ARBOR FUND ON BEHALF OF THE PRIME
OBLIGATION FUND AND THE U.S. GOVERNMENT
SECURITIES MONEY FUND, AND STI CLASSIC FUNDS, ON BEHALF
OF ITS CLASSIC INSTITUTIONAL CASH MANAGEMENT MONEY
MARKET FUND AND THE CLASSIC INSTITUTIONAL U.S. GOVERNMENT
SECURITIES MONEY MARKET FUND
Ladies and Gentlemen:
We have acted as counsel to the Arbor Fund, a Massachussetts business trust,
in connection with the execution and delivery of the Agreement and Plan of
Reorganization (the "Agreement"), dated as of February 22, 1999, by STI
Classic Funds, on behalf of its Classic Institutional Cash Management Money
Market Fund and Classic Institutional U.S. Government Securities Money Market
Fund (the "Acquiring Funds") relating to the transfer of all the assets and
liabilities of the Arbor Prime Obligations Fund and U.S. Government
Securities Money Fund (the "Selling Funds"), in exchange for shares of each
corresponding Acquiring Fund, followed by the distribution of such Shares
(the "Acquiring Fund's Shares") to the holders of shares of the Selling Fund
("Selling Fund's Shares") in exchange for such Selling Fund's Shares in
complete liquidation of the Selling Fund (the "Reorganization"), pursuant to
the Agreement. This opinion letter is delivered to you pursuant to Section
8.6 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
STI Classic Funds
February 26, 1999
Page 2
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 each Acquiring Fund's Shares to be received
by each Selling Fund shareholder in the Reorganization will be
approximately equal to the fair market value of the shares in each
Selling Fund surrendered and exchanged therefor.
3. No consideration other than the Acquiring Fund's Shares and the
assumption by each Acquiring Fund of the stated liabilities of its
corresponding Selling Fund will be issued in exchange for the
assets of each Selling Fund in the Reorganization.
4. Neither Acquiring Fund has any plan or intention to sell additional
shares of its beneficial interest or to redeem or otherwise
reacquire any of its shares issued in the Reorganization other than
in the ordinary course of its business as a regulated investment
company.
5. Neither Acquiring Fund has any plan or intention to sell or otherwise
dispose of any of its corresponding Selling Fund's assets to be
acquired by it in the Reorganization except for dispositions made in
the ordinary course of its business as a regulated investment company.
6. Following the Reorganization, each Acquiring Fund will continue the
historic business of its corresponding Selling Fund or use a
significant portion of its corresponding Selling Fund's assets in its
business.
7. Immediately following consummation of the Reorganization, each
Acquiring
STI Classic Funds
February 26, 1999
Page 3
Fund will possess the same liabilities as those possessed by its
corresponding Selling Fund immediately prior to the Reorganization.
The fair market value of the assets of each Selling Fund acquired by
its corresponding Acquiring Fund will exceed the liabilities of each
Selling Fund assumed by its corresponding Acquiring Fund plus the
amount of liabilities, if any, to which the acquired assets are
subject.
8. There is no intercorporate indebtedness existing between each
Acquiring Fund and its corresponding Selling Fund that was issued,
acquired, or will be settled at a discount.
9. Each Acquiring Fund will meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended, (the "Code") for
qualification and treatment as a regulated investment company.
10. Neither Acquiring Fund does not own nor will acquire prior to the
consummation of the Reorganization any shares of beneficial interest
in its corresponding Selling Fund.
11. Not more than 25 percent of the value of the total assets of each
Selling Fund or its corresponding Acquiring Fund is invested in the
stock and securities of any one issuer, and not more than 50 percent
of the value of each Fund's assets is invested in the stock and
securities of five or fewer issuers.
Our opinion summarizes certain Federal income tax consequences of the
Reorganization to holders of shares in the Selling Fund (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
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 tax-free reorganizations
under Section 368(a) of the Code, and that the Selling Funds and Acquiring Funds
will each be a party to the reorganizations within the meaning of Section 368(b)
of the Code.
STI Classic Funds
February 26, 1999
Page 4
The Reorganization, constituting tax-free reorganizations, will have the
following Federal income tax consequences for the Shareholders, each Selling
Fund and its corresponding Acquiring Fund:
1. No gain or loss will be recognized by a Selling Fund upon the
transfer of its assets in exchange solely for its corresponding
Acquiring Fund's Shares and the assumption by the Acquiring Fund
of the Selling Fund's stated liabilities;
2. No gain or loss will be recognized by an Acquiring Fund on its
receipt of its corresponding Selling Fund's assets in exchange for
the Acquiring Fund's Shares and the assumption by the Acquiring
Fund of the Selling Fund's stated liabilities;
3. The basis of a Selling Fund's assets in its corresponding Acquiring
Fund's hands will be the same as the basis of those assets in the
Selling Fund's hands immediately before the Reorganization;
4. An Acquiring Fund's holding period for the assets transferred to
that Acquiring Fund by its corresponding Selling Fund will include
the holding period of those assets in the Selling Fund's hands
immediately before the Reorganization;
5. No gain or loss will be recognized by a Selling Fund on the
distribution of its corresponding Acquiring Fund's Shares to the
Selling Fund's Shareholders in exchange for such Selling Fund's
Shares;
6. No gain or loss will be recognized by a Selling Fund's
shareholders as a result of the Selling Fund's distribution of its
corresponding Acquiring Fund's Shares to the Acquired Fund's
Shareholders in exchange for that Selling Fund's Shareholders'
Selling Fund's Shares;
7. The basis of an Acquiring Fund's Shares received by its corresponding
Selling Fund's shareholders will be the same as the adjusted basis of
that Selling Fund's Shareholders' Selling Fund's Shares surrendered
in exchange therefor; and
8. The holding period of an Acquiring Fund's Shares received by that
Acquired Fund's Shareholders will include its corresponding Selling
Fund's Shareholders' holding period for that Selling Fund's
Shareholders' Selling
STI Classic Funds
February 26, 1999
Page 5
Fund's Shares surrendered in exchange therefor, provided that such
Selling Fund's Shares were held as capital assets on the date of the
Reorganization.
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 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
Xxxxxx, Xxxxx & Xxxxxxx LLP
