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Exhibit (12)(a)
ARMADA FUNDS
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February 11, 2000
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
One ▇▇▇▇▇ Square
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Re: Agreement and Plan of Reorganization by and between Armada Funds
and The Parkstone Group of Funds, dated November 17, 1999
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Dear Ladies and Gentlemen:
The Parkstone Group of Funds ("Parkstone") and we have
requested your opinion as to certain Federal income tax matters in connection
with the proposed reorganization (the "Reorganization") of the Prime Obligations
Fund, U.S. Government Obligations Fund, Tax-Free Fund, Bond Fund, Limited
Maturity Bond Fund, Intermediate Government Obligations Fund, Equity Income
Fund, Small Capitalization Fund, International Discovery Fund, Balanced
Allocation Fund and National Tax Exempt Bond Fund (each a "Transferor Fund" and
collectively the "Transferor Funds") of Parkstone into the Money Market Fund,
Government Money Market Fund, Tax Exempt Money Market Fund, Bond Fund, Limited
Maturity Bond Fund, Intermediate Bond Fund, Equity Income Fund, Small Cap Growth
Fund, International Equity Fund, Balanced Allocation Fund and National Tax
Exempt Bond Fund (each a "Surviving Fund" and collectively the "Surviving
Funds") of Armada Funds ("Armada") pursuant to the above-referenced Agreement
and Plan of Reorganization (the "Reorganization Agreement") by and between
Armada and Parkstone.
At the Effective Time of the Reorganization (as defined in the
Reorganization Agreement), it is contemplated that each Transferor Fund will
transfer all of its assets and liabilities to the corresponding Surviving Fund
in exchange for shares (the "Shares") of the corresponding Surviving Fund. Each
Transferor Fund will then distribute the Shares of the Surviving Fund to the
shareholders of the Transferor Fund in exchange for all outstanding shares of
the Transferor Fund, and the existence of each Transferor Fund will be
terminated. All of the above steps will constitute the "Transactions."
To enable you to render your opinion, we are furnishing the
following representations:
1. Each Surviving Fund qualified as a "regulated investment
company" under Part I of Subchapter M of Subtitle A, Chapter 1, of the Internal
Revenue
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Code of 1986, as amended, for its most recently ended taxable year and
will so qualify for its current taxable year.
2. Following the Transactions, each Surviving Fund will
continue the historic business of the corresponding Transferor Fund or will use
a significant portion of the corresponding Transferor Fund's historic business
assets in a business.
3. No Surviving Fund has any plan or intention to reacquire
any of its Shares issued in the Transactions, except in the ordinary course of
business.
4. No Surviving Fund has any plan or intention to sell or
otherwise to dispose of any of the assets of the corresponding Transferor Fund
acquired in the Transactions, except for dispositions made in the ordinary
course of business.
5. There is and will be, no intercorporate indebtedness
between any Surviving Fund and the corresponding Transferor Fund that was
issued, acquired or will be settled at a discount.
6. No Surviving Fund has owned during the past five years or
will own, directly or indirectly, any stock of the corresponding Transferor
Fund.
7. The Transactions will be accomplished for the purposes set
forth in the Combined Proxy Statement/Prospectus, which is part of the
Registration Statement that is being filed this day with the SEC on Form N-14.
We understand that you will, and expressly authorize you to,
rely upon each of the foregoing representations in rendering your opinion of
even date herewith. We undertake to advise you promptly if we become aware of
any facts or circumstances that would cause any representation that we have
given to be incorrect.
Very truly yours,
ARMADA FUNDS
By:
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Name:
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Title:
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THE PARKSTONE GROUP OF FUNDS
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February 11, 2000
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
One ▇▇▇▇▇ Square
▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Agreement and Plan of Reorganization by and between Armada Funds
and The Parkstone Group of Funds, dated November 17, 1999
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Dear Ladies and Gentlemen:
The Armada Funds ("Armada") and we have requested your opinion
as to certain Federal income tax matters in connection with the proposed
reorganization (the "Reorganization") of the Prime Obligations Fund, U.S.
Government Obligations Fund, Tax-Free Fund, Bond Fund, Limited Maturity Bond
Fund, Intermediate Government Obligations Fund, Equity Income Fund, Small
Capitalization Fund, International Discovery Fund, Balanced Allocation Fund and
National Tax Exempt Bond Fund (each a "Transferor Fund" and collectively the
"Transferor Funds") of the Parkstone Group of Funds ("Parkstone") into the Money
Market Fund, Government Money Market Fund, Tax Exempt Money Market Fund, Bond
Fund, Limited Maturity Bond Fund, Intermediate Bond Fund, Equity Income Fund,
Small Cap Growth Fund, International Equity Fund, Balanced Allocation Fund and
National Tax Exempt Bond Fund (each a "Surviving Fund" and collectively the
"Surviving Funds") respectively, of Armada, pursuant to the above-referenced
Agreement and Plan of Reorganization (the "Reorganization Agreement") by and
between Armada and Parkstone.
At the Effective Time of the Reorganization (as defined in the
Reorganization Agreement), it is contemplated that each Transferor Fund will
transfer all of its assets and liabilities to the corresponding Surviving Fund
in exchange for shares (the "Shares") of the corresponding Surviving Fund. Each
Transferor Fund will then distribute the Shares of the Surviving Fund to the
shareholders of the Transferor Fund in exchange for all outstanding shares of
the Transferor Fund, and the existence of each Transferor Fund will be
terminated. All of the above steps will constitute the "Transactions."
To enable you to render your opinion, we are furnishing the
following representations:
1. Each Transferor Fund qualified as a "regulated investment
company" under Part I of Subchapter M of Subtitle A, Chapter 1, of the Internal
Revenue
4
Code of 1986, as amended, for its most recently ended taxable year and
will so qualify for its current taxable year.
2. Each Transferor Fund will transfer to the corresponding
Surviving Fund assets consisting of at least 90% of the fair market value of the
Transferor Fund's net assets and at least 70% of the fair market value of its
gross assets immediately prior to the Transactions. For purposes of this
assumption, all of the following shall be considered as assets of each
Transferor Fund held immediately prior to the Transactions: (a) amounts used by
each Transferor Fund to pay its expenses in connection with the Transactions and
(b) all amounts used to make redemptions of or distributions on each Transferor
Fund's shares (except for distributions of net investment company taxable income
and net capital gains, other than net capital gains resulting from sales of
assets for the purpose of satisfying investment objectives of each Surviving
Fund, if any, that differ from the existing investment objectives of the
corresponding Transferor Fund).
3. Each Transferor Fund will, as of the Effective Time,
distribute Shares of the corresponding Surviving Fund received in Transactions
to each of the Transferor Fund's shareholders in complete liquidation of the
Transferor Fund and, having made such distributions, will take all necessary
steps to terminate the Transferor Fund's existence.
4. The aggregate adjusted income tax basis and the aggregate
fair market value of the assets to be transferred by each Transferor Fund to the
corresponding Surviving Fund each equals or exceeds the sum of the liabilities
to be assumed by the corresponding Surviving Fund or to which such transferred
assets are subject.
5. There is no plan or intention by the shareholders of any
Transferor Fund who own five percent (5%) or more of such Transferor Fund's
stock and, to the best of the knowledge of the management of each Transferor
Fund, no plan or intention on the part of the remaining shareholders of such
Transferor Fund, to redeem or exchange a corresponding number of Shares of the
Surviving Fund's stock to be received in the Transactions that would reduce the
Transferor Fund shareholders' ownership of the Surviving Fund stock to a number
of shares having a value, as of the time of the Transactions, of less than fifty
percent (50%) of the value of all of the formerly outstanding stock of the
Transferor Fund immediately prior to the Transactions. For purposes of this
assumption, (a) shares of each Transferor Fund surrendered by dissenters will be
treated as outstanding Transferor Fund stock immediately prior to the
Transactions, and (b) shares of each Transferor Fund and the corresponding
Surviving Fund held by Transferor Fund shareholders and otherwise redeemed
(except for redemptions occurring in the ordinary course of each Surviving
Fund's business as an open-end investment company) in anticipation of the
Transactions, or subsequent to the Transactions pursuant to a plan or intention
that existed at the time of the Transactions, also will be taken into account.
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6. No Transferor Fund is, or will be, under the jurisdiction
of a court in a case under Title 11 of the United States Code or a receivership,
foreclosure or similar proceeding in any Federal or State court.
7. The liabilities of each Transferor Fund that will be
assumed by the corresponding Surviving Fund and the liabilities, if any, to
which the transferred assets will be subject were incurred by each Transferor
Fund in the ordinary course of its business.
8. The Transactions have been proposed for the purposes set
forth in the Combined Proxy Statement/Prospectus, which is part of the
Registration Statement that is being filed this day with the SEC on Form N-14.
We understand that you will, and expressly authorize you to,
rely upon each of the foregoing representations in rendering your opinion of
even date herewith. We undertake to advise you promptly if we become aware of
any facts or circumstances that would cause any representation that we have
given to be incorrect.
Very truly yours,
PARKSTONE GROUP OF FUNDS
By:
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Name:
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Title:
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February 11, 2000
Armada Funds
The Parkstone Group of Funds
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▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Agreement and Plan of Reorganization by and between Armada Funds
and The Parkstone Group of Funds, dated November 17, 1999
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Dear Ladies and Gentlemen:
You have asked for our opinion as to certain Federal income
tax consequences of transactions contemplated in the above-referenced Agreement
and Plan of Reorganization (the "Reorganization Agreement").
Background
The Parkstone Group of Funds ("Parkstone") offers multiple
funds including: the Prime Obligations Fund, U.S. Government Obligations Fund,
Tax-Free Fund, Bond Fund, Limited Maturity Bond Fund, Intermediate Government,
Obligations Fund, Equity Income Fund, Small Capitalization Fund, International
Discovery Fund, Balanced Allocation Fund and National Tax Exempt Bond Fund (each
a "Transferor Fund" and collectively the "Transferor Funds"). Armada Funds
offers multiple portfolios including: the Money Market Fund, Government Money
Market Fund, the Money Market Fund, Government Money Market Fund, Tax Exempt
Money Market Fund, Bond Fund, Limited Maturity Bond Fund, Intermediate Bond
Fund, Equity Income Fund, Small Cap Growth Fund, International Equity Fund,
Balanced Allocation Fund and National Tax Exempt Bond Fund, (each a Surviving
Fund and collective the "Surviving Funds"). Armada and Parkstone are open-end
management investment companies registered with the Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940, as amended.
At the Effective Time of the Reorganization (as defined in the
Reorganization Agreement), it is contemplated that each Transferor Fund will
transfer all of its assets and liabilities to corresponding Surviving Fund in
exchange for shares (the "Shares") of the corresponding Surviving Fund. Each
Transferor Fund will then distribute the Shares of the corresponding Surviving
Fund to the shareholders of the corresponding Transferor Fund in exchange for
all outstanding shares of each corresponding Transferor Fund, and each existence
of each Transferor Fund will be terminated. All of the above steps will
constitute the "Transactions."
For purposes of this opinion, we have relied on certain
written representations of officers of Parkstone and Armada, copies of which are
attached hereto,
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and have assumed such representations to be true. We have also assumed that the
Reorganization Agreement substantially in the form included as Appendix A to
the Combined Proxy Statement/Prospectus (the "Proxy Statement"), which is part
of the Registration Statement (the "Registration Statement") that is being
filed this day with the SEC on Form N-14, has been duly authorized by the
parties and approved by the shareholders of each Transferor Fund, and the
appropriate documents have been filed with the appropriate government agencies.
Conclusions
Based upon the Internal Revenue Code of 1986, as amended (the
"Code"), applicable Treasury Department regulations in effect as of the date
hereof, current published administrative positions of the Internal Revenue
Service contained in revenue rulings and procedures, and judicial decisions, and
upon the assumptions and representations referred to herein and the documents
provided to us by you (including the Proxy Statement and the Reorganization
Agreement), it is our opinion for Federal income tax purposes that:
(i) the acquisition of the assets and assumption of the
liabilities of each Transferor Fund by the corresponding Surviving Fund in
return for Shares of the Surviving Fund followed by the distribution of such
Shares to the shareholders of the Transferor Fund, as provided in the
Reorganization Agreement, will constitute a "reorganization" within the meaning
of section 368(a)(1)(C) or 368(a)(1)(D) of the Code, and each such Fund will be
"a party to the reorganization" within the meaning of section 368(b) of the
Code;
(ii) in accordance with sections 361(a), 361(c)(1) and 357(a)
of the Code, no gain or loss will be recognized by the Transferor Funds as a
result of the Transactions;
(iii) in accordance with section 1032(a) of the Code, no gain
or loss will be recognized by the Surviving Funds as a result of the
Transactions;
(iv) in accordance with section 354(a)(1) of the Code, no gain
or loss will be recognized by the shareholders of each Transferor Fund upon the
receipt of the Shares of each Surviving Fund in exchange for their Transferor
Fund shares;
(v) in accordance with section 358(a)(1) of the Code, the tax
basis of the Shares of each Surviving Fund received by the shareholders of the
Transferor Fund will be the same as the tax basis of the shares of the
Transferor Fund exchanged therefor in the Transactions;
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(vi) in accordance with section 362(b) of the Code, the tax
basis of the assets received by each Surviving Fund in the Transactions will be
the same as the tax basis of such assets in the hands of the corresponding
Transferor Fund immediately before the Transactions;
(vii) in accordance with section 1223(1) of the Code, the
holding period of the Shares of each Surviving Fund received by the shareholders
of the corresponding Transferor Fund will include the holding period of the
shares of the Transferor Fund exchanged therefor, provided that at the time of
the exchange the shares of the Transferor Fund were held as capital assets;
(viii) in accordance with section 1223(2) of the Code, the
holding period of each Surviving Fund with respect to the assets acquired in the
Transactions will include the period during which such assets were held by the
corresponding Transferor Fund; and
(ix) in accordance with section 381(a) of the Code, each
Surviving Fund will succeed to the tax attributes of the corresponding
Transferor Fund described in section 381(c) of the Code.
This opinion represents our best legal judgment, but it has no
binding effect or official status of any kind, and no assurance can be given
that contrary positions may not be taken by the Internal Revenue Service or a
court concerning the issues. We express no opinion relating to any Federal
income tax matter except on the basis of the facts described above.
Additionally, we express no opinion on the tax consequences under foreign, state
or local laws. In issuing our opinion, we have relied solely upon existing
provisions of the Code, existing and proposed regulations thereunder, and
current administrative positions and judicial decisions. Such laws, regulations,
administrative positions and judicial decisions are subject to change at any
time. Any such change could affect the validity of the opinion set forth above.
Also, future changes in Federal income tax laws and the interpretation thereof
can have retroactive effect.
We hereby consent to the filing of this opinion with the SEC
as an exhibit to the Registration Statement. We also consent to the references
to our firm under the caption "INFORMATION RELATING TO THE PROPOSED
REORGANIZATION-- Federal Income Tax Consequences" in the Proxy Statement. In
consenting to such references to our firm, we have not certified any part of the
Registration Statement, and
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such consent does not establish that we come within the categories of persons
whose consent is required under section 7 of the Securities Act of 1933 or under
the rules and regulations of the SEC issued thereunder.
Very truly yours,
DRINKER ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
SDDH:FCM
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