EXHIBIT 16(12) UNDER FORM N-14
XXXXXXXX, XXXXX, XXXXXXX & XXXXX, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Philadelphia, PA 19103-7098
Telephone (000) 000-0000
Fax (000) 000-0000
January 5, 2001
Board of Trustees
Forum Funds
P.O. Box 446
Portland, Maine 04112
Board of Trustees
Stratevest Funds
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Re: AGREEMENT AND PLAN OF REORGANIZATION, DATED DECEMBER 1, 2000 (THE "PLAN"),
MADE BY FORUM FUNDS ("FORUM FUNDS"), ON BEHALF OF ITS SERIES, INVESTORS
HIGH GRADE BOND FUND (THE "ACQUIRED FUND") AND STRATEVEST FUNDS
("STRATEVEST FUNDS"), ON BEHALF OF ITS SERIES, STRATEVEST INTERMEDIATE BOND
FUND (THE "ACQUIRING FUND")
Ladies and Gentlemen:
You have requested our opinion concerning certain federal income tax
consequences of the reorganization of the Acquired Fund, which will consist of:
(i) the acquisition, by the Acquiring Fund, of substantially all of the
property, assets and goodwill of the Acquired Fund, in exchange solely for
shares of beneficial interest, without par value, of the Acquiring Fund (the
"Acquiring Fund Shares") and the assumption of the Acquired Fund's liabilities;
(ii) the distribution by the Acquired Fund of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in complete liquidation of the Acquired Fund;
and (iii) the subsequent dissolution of the Acquired Fund, as soon as is
practicable after the closing date of the reorganization (the "Reorganization"),
all upon and subject to the terms and conditions of the Plan.
In rendering our opinion, we have reviewed and relied upon: (a) the Plan
dated December 1, 2000, made by Forum Funds and Stratevest Funds; (b) the proxy
materials provided to shareholders of the Acquired Fund in connection with the
Special Meeting of Shareholders of the Acquired Fund held on December 1, 2000;
(c) certain representations concerning the Reorganization made to us by Forum
Funds and Stratevest Funds in letters dated January 4, 2001 (the "Representation
Letters"); (d) all other documents, financial and other reports and corporate
minutes which we deemed relevant or appropriate; and (e) such statutes,
regulations, rulings and decisions as we deemed material in rendering this
opinion. All terms used herein, unless otherwise defined, are used as defined in
the Plan.
For purposes of this opinion, we have assumed that the Acquired Fund, on
the closing date of the Reorganization, satisfies, and immediately after the
closing date, the Acquiring Fund will satisfy, the requirements of Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), for qualification
as a regulated investment company.
Based on the foregoing, and provided the Reorganization is carried out in
accordance with the applicable laws of the State of Delaware, the Plan and the
Representation Letters, it is our opinion that:
1. The acquisition by the Acquiring Fund of substantially all of the assets
of the Acquired Fund in exchange for the Acquiring Fund Shares and the
assumption by the Acquiring Fund of the Acquired Fund's liabilities, followed by
the distribution by the Acquired Fund to its shareholders of the Acquiring Fund
Shares in complete liquidation of the Acquired Fund, will qualify as a
reorganization within the meaning of Section 368(a)(1) of the Code, and the
Acquired Fund and the Acquiring Fund will each be a "party to the
reorganization" within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by the Acquired Fund upon the
transfer of substantially all of its assets to the Acquiring Fund in exchange
solely for the Acquiring Fund Shares and the assumption by the Acquiring Fund of
the Acquired Fund's liabilities, pursuant to Sections 361(a) and 357(a) of the
Code.
3. No gain or loss will be recognized by the Acquiring Fund upon the
receipt by it of substantially all of the assets of the Acquired Fund and the
assumption by the Acquiring Fund of the Acquired Fund's liabilities in exchange
solely for the Acquiring Fund Shares, pursuant to Section 1032(a) of the Code.
4. No gain or loss will be recognized by the Acquired Fund upon the
distribution of the Acquiring Fund Shares to its shareholders in complete
liquidation of the Acquired Fund, pursuant to Section 361(c)(1) of the Code.
5. The basis of the assets of the Acquired Fund received by the Acquiring
Fund will be the same as the basis of such assets to the Acquired Fund
immediately prior to the closing date of the Reorganization, pursuant to Section
362(b) of the Code.
6. The holding period of the assets of the Acquired Fund received by the
Acquiring Fund will include the period during which such assets were held by the
Acquired Fund, pursuant to Section 1223(2) of the Code.
7. No gain or loss will be recognized by the shareholders of the Acquired
Fund upon the exchange of their shares of the Acquired Fund (the "Acquired Fund
Shares") for the Acquiring Fund Shares (including fractional shares to which
they may be entitled), pursuant to Section 354(a) of the Code.
8. The basis of the Acquiring Fund Shares received by the shareholders of
the Acquired Fund (including fractional shares to which they may be entitled)
will be the same as the basis of the Acquired Fund Shares exchanged therefor,
pursuant to Section 358(a)(1) of the Code.
9. The holding period of the Acquiring Fund Shares received by the
shareholders of the Acquired Fund (including fractional shares to which they may
be entitled) will include the holding period of the Acquired Fund Shares
surrendered in exchange therefor, provided that the Acquired Fund Shares were
held as a capital asset on the closing date of the Reorganization, pursuant to
Section 1223(1) of the Code.
10. The Acquiring Fund will succeed to and take into account, as of the
date of the transfer (as defined in Section 1.381(b)-1(b) of the regulations
issued by the United States Treasury ("Treasury Regulations")), the items of the
Acquired Fund described in Section 381(c) of the Code, subject to the conditions
and limitations specified in Sections 381, 382, 383 and 384 of the Code and the
Treasury Regulations.
Our opinion is based upon the Code, the applicable Treasury Regulations
promulgated thereunder, the present positions of the Internal Revenue Service
(the "Service") as are set forth in published revenue rulings and revenue
procedures, present administrative positions of the Service, and existing
judicial decisions, all of which are subject to change either prospectively or
retroactively. We do not undertake to make any continuing analysis of the facts
or relevant law following the date of this opinion.
Our opinion is conditioned upon the performance by the Acquiring Fund and
the Acquired Fund of their undertakings in the Plan and the Representation
Letters.
Our opinion is limited to the transactions incident to the Reorganization
described herein, and no opinion is rendered with respect to (i) any other
transaction, including, without limitation, the common and collective fund
conversions involving the following common and collective funds and the
Acquiring Fund that settled on October 1, 2000, and October 10, 2000,
respectively:
- Maximum Income Bond Fund
- Mid/Small Cap Fund
- Value Stock Fund
- Vermont Tax Exempt Fund
- Large Cap Growth Fund
- Bond Fund
(collectively, the "Common Trust Fund Conversions"), or (ii) the effect, if any,
of the Reorganization (and/or the transactions incident thereto) of any other
transaction, including, without limitation, the Common Trust Fund Conversions.
This opinion is being rendered to the Acquiring Fund and the Acquired Fund,
and may be relied upon only by such funds and the shareholders of each.
Very truly yours,
XXXXXXXX, XXXXX, XXXXXXX & XXXXX, LLP
By:/S/ XXXXX X. XXXXXX, PARTNER
Xxxxx X. Xxxxxx
