September __, 1999
STI Classic Funds
0 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN
STI CLASSIC FUNDS (THE "TRUST"), ON BEHALF OF ITS
SMALL CAP GROWTH STOCK FUND, AND THE TRUST
ON BEHALF OF ITS SUNBELT EQUITY FUND
Ladies and Gentlemen:
We have acted as counsel to STI Classic Funds (the "Trust"), a Massachusetts
business trust, in connection with the execution and delivery of the Agreement
and Plan of Reorganization (the "Agreement"), dated as of September __, 1999, by
and between the Trust, on behalf of its Small Cap Growth Stock Fund (the
"Acquiring Fund"), and the Trust on behalf of its Sunbelt Equity Fund (the
"Transferring Fund"), relating to the transfer of all the assets and liabilities
of the Transferring Fund in exchange for shares of the Acquiring Fund, followed
by the distribution of such Shares (the "Acquiring Fund's Shares") to the
holders of shares of the Transferring Fund ("Transferring Fund's Shares") in
exchange for such Transferring Fund's Shares in complete liquidation of the
Transferring Fund (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,
STI Classic Funds
September __, 1999
Page 2
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 Acquiring Fund and the Transferring Fund each have been and will
continue to be treated as a corporation for Federal income tax
purposes.
3. The fair market value of the Acquiring Fund's Shares to be received
by the Transferring Fund's shareholders in the Reorganization will
be approximately equal to the fair market value of the shares in the
Transferring Fund surrendered and exchanged therefor.
4. No consideration other than the Acquiring Fund's Shares and the
assumption by the Acquiring Fund of the stated liabilities of the
Transferring Fund will be issued in exchange for the assets of the
Transferring Fund in the Reorganization.
5. The Acquiring Fund has no plan or intention to sell additional
shares of beneficial interest in the Acquiring Fund or to redeem or
otherwise reacquire any of the Acquiring Fund's Shares issued in the
Reorganization other than in the ordinary course of its business as
a regulated investment company.
6. The Acquiring Fund has no plan or intention to sell or otherwise
dispose of any of the Transferring 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.
7. Following the Reorganization, the Acquiring Fund will continue the
historic business of the Transferring Fund or use a significant
portion of the Transferring Fund's assets in its business.
STI Classic Funds
September __, 1999
Page 3
8. Immediately following consummation of the Reorganization, the
Acquiring Fund will possess the same liabilities as those possessed
by the Transferring Fund immediately prior to the Reorganization.
The fair market value of the assets of the Transferring Fund
acquired by the Acquiring Fund will exceed the liabilities of the
Transferring Fund assumed by the Acquiring Fund plus the amount of
liabilities, if any, to which the acquired assets are subject.
9. There is no intercorporate indebtedness existing between the
Acquiring Fund and the Transferring Fund that was issued, acquired,
or will be settled at a discount.
10. The 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.
11. The Acquiring Fund does not own nor will it acquire prior to the
consummation of the Reorganization any shares of beneficial interest
in the Transferring Fund.
12. Not more than 25 percent of the value of the total assets of both
the Transferring Fund and the Acquiring Fund is invested in the
stock and securities of any one issuer and not more than 50 percent
of the value of those total 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 Transferring 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 a tax-free reorganization
under Section 368(a) of the Code, and
STI Classic Funds
September __, 1999
Page 4
that the Transferring Fund and Acquiring Fund 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 Transferring Fund, and
the Acquiring Fund:
1. No gain or loss will be recognized by the Transferring Fund upon the
transfer of its assets in exchange solely for the Acquiring Fund's
Shares and the assumption by the Acquiring Fund of the Transferring
Fund's stated liabilities;
2. No gain or loss will be recognized by the Acquiring Fund on its
receipt of the Transferring Fund's assets in exchange for the
Acquiring Fund's Shares and the assumption by the Acquiring Fund of
the Transferring Fund's stated liabilities;
3. The basis of the Transferring Fund's assets in the Acquiring Fund's
hands will be the same as the basis of those assets in the
Transferring Fund's hands immediately before the Reorganization;
4. The Acquiring Fund's holding period for the assets transferred to
the Acquiring Fund by the Transferring Fund will include the holding
period of those assets in the Transferring Fund's hands immediately
before the Reorganization;
5. No gain or loss will be recognized by the Transferring Fund on the
distribution of the Acquiring Fund's Shares to the Transferring
Fund's shareholders in exchange for Transferring Fund's Shares;
6. No gain or loss will be recognized by the Transferring Fund's
shareholders as a result of the Transferring Fund's distribution of
Acquiring Fund's Shares to the Transferring Fund's shareholders in
exchange for the Transferring Fund's shareholders' Transferring
Fund's Shares;
7. The basis of the Acquiring Fund's Shares received by the
Transferring Fund's shareholders will be the same as the adjusted
basis of that
STI Classic Funds
September __, 1999
Page 5
Transferring Fund's shareholders' Transferring Fund's Shares
surrendered in exchange therefor; and
8. The holding period of the Acquiring Fund's Shares received by the
Transferring Fund's shareholders will include the Transferring
Fund's shareholders' holding period for the Transferring Fund's
shareholders' Transferring Fund's Shares surrendered in exchange
therefor, provided that said Transferring 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 on behalf of the Transferring Fund and the Acquiring
Fund 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,
