EDGAR EXHIBIT 12
4
Exhibit 12
September 22, 2000
Calvert Large Cap Growth Fund & Social Responsibility
Portfolio
a series of a series of
Calvert Impact Fund, Inc. Bridgeway Fund., Inc.
4550 Montgomery Avenue 5615 Kirby Dr., Suite 518
Bethesda, Maryland 20814 Houston, Texas 77005-2448
Re: Acquisition of Assets of the Social Responsibility Portfolio, a series of
Bridgeway Fund, Inc.
Ladies and Gentlemen:
You have asked for our opinion as to certain tax consequences of the proposed
acquisition of assets of the Social Responsibility Portfolio, a series of
Bridgeway Funds, Inc., a Maryland corporation ("Selling Fund"), by Calvert Large
Cap Growth Fund ("Acquiring Fund"), a series of Calvert Impact Fund, Inc., in
exchange for voting shares of Acquiring Fund (the Reorganization").
In rendering our opinion, we have reviewed and relied upon the draft
Prospectus/Proxy Statement dated September 25, 2000 and the Agreement and Plan
of Reorganization (the "Agreement") dated as of September 22, 2000. We have
relied, without independent verification, upon the factual statements made
therein, and assume that there will be no change in material facts disclosed
therein between the date of this letter and the date of closing of the
Reorganization. We further assume that the Reorganization will be carried out in
accordance with the Agreement. We have also relied upon the following
representations, each of which has been made to us by officers of Calvert Large
Cap Growth Fund and Bridgeway Fund, Inc. behalf of Acquiring Fund or of Selling
Fund:
The Reorganization will be consummated substantially as described in the
Agreement.
Acquiring Fund will acquire from Selling Fund at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the gross
assets held by Selling Fund immediately prior to the Reorganization. For
purposes of this representation, assets of Selling Fund used to pay
reorganization expenses, cash retained to pay liabilities, and redemptions and
distributions (except for regular and normal distributions) made by Selling Fund
immediately preceding the transfer which are part of the plan of reorganization,
will be considered as assets held by Selling Fund immediately prior to the
transfer.
To the best of the knowledge of management of Selling Fund, there is no plan or
intention on the part of the shareholders of Selling Fund to sell, exchange, or
otherwise dispose of a number of Acquiring Fund shares received in the
Reorganization that would reduce the former Selling Fund shareholders' ownership
of Acquiring Fund shares to a number of shares having a value, as of the date of
the Reorganization (the "Closing Date"), of less than 50 percent of the value of
all of the formerly outstanding shares of Selling Fund as of the same date. For
purposes of this representation, Selling Fund shares exchanged for cash or other
property will be treated as outstanding Selling Fund shares on the Closing Date.
There are no dissenters' rights in the Reorganization, and no cash will be
exchanged for Selling Fund shares in lieu of fractional shares of Acquiring
Fund. Moreover, shares of Selling Fund and shares of Acquiring Fund held by
Selling Fund shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Reorganization will be considered in making this
representation, except for shares of Selling Fund or Acquiring Fund redeemed in
the ordinary course of business of Selling Fund or Acquiring Fund in accordance
with the requirements of section 22(e) of the Investment Company Act of 1940.
Selling Fund has not redeemed and will not redeem the shares of any of its
shareholders in connection with the Reorganization except to the extent
necessary to comply with its legal obligation to redeem its shares.
The management of Acquiring Fund has no plan or intention to redeem or reacquire
any of the Acquiring Fund shares to be received by Selling Fund shareholders in
connection with the Reorganization, except to the extent necessary to comply
with its legal obligation to redeem its shares.
The management of Acquiring Fund has no plan or intention to sell or dispose of
any of the assets of Selling Fund, which will be acquired by Acquiring Fund in
the Reorganization, except for dispositions made in the ordinary course of
business, and to the extent necessary to enable Acquiring Fund to comply with
its legal obligation to redeem its shares.
Following the Reorganization, Acquiring Fund will continue the historic business
of Selling Fund in a substantially unchanged manner as part of the regulated
investment company business of Acquiring Fund, or will use a significant portion
of Selling Fund's historic business assets in a business.
There is no indebtedness between Acquiring Fund and Selling Fund.
Acquiring Fund does not own, directly or indirectly, and has not owned in the
last five years, directly or indirectly, any shares of Selling Fund. Acquiring
Fund will not acquire any shares of Selling Fund prior to the Closing Date.
Acquiring Fund will not make any payment of cash or of property other than
shares to Selling Fund or to any shareholder of Selling Fund in connection with
the Reorganization.
Pursuant to the Agreement, the shareholders of Selling Fund will receive solely
Acquiring Fund voting shares in exchange for their voting shares of Selling
Fund.
The fair market value of the Acquiring Fund shares to be received by the Selling
Fund shareholders will be approximately equal to the fair market value of the
Selling Fund shares surrendered in exchange therefor.
Subsequent to the transfer of Selling Fund assets to Acquiring Fund pursuant to
the Agreement, Selling Fund will distribute the shares of Acquiring Fund,
together with other assets it may have, in final liquidation as expeditiously as
possible.
Selling Fund is not under the jurisdiction of a court in a Title 11 or similar
case within the meaning of Section 368(a) (3) (A) of the Internal Revenue Code
of 1986, as amended (the "Code").
Selling Fund is treated as a corporation for federal income tax purposes and at
all times in its existence has qualified as a regulated investment company, as
defined in Section 851 of the Code.
Acquiring Fund is treated as a corporation for federal income tax purposes and
at all times in its existence has qualified as a regulated investment company,
as defined in Section 851 of the Code.
The sum of the liabilities of Selling Fund to be assumed by Acquiring Fund and
the expenses of the Reorganization does not exceed twenty percent of the fair
market value of the assets of Selling Fund.
The foregoing representations are true on the date of this letter and will be
true on the date of closing of the Reorganization.
Based on and subject to the foregoing, and our examination of the legal
authority, we have deemed to be relevant, it is our opinion that for federal
income tax purposes:
The acquisition by Acquiring Fund of substantially all of the assets of Selling
Fund solely in exchange for voting shares of Acquiring Fund followed by the
distribution by Selling Fund of said Acquiring Fund shares to the shareholders
of Selling Fund in exchange for their Selling Fund shares will constitute a
reorganization within the meaning of Section 368 (a) (1) (C) of the Code, and
Acquiring Fund and Selling Fund will each be via party to a reorganization
within the meaning of Section 368(b) of the Code.
No gain or loss will be recognized to Selling Fund upon the transfer of
substantially all of its assets to Acquiring Fund solely in exchange for
Acquiring Fund voting shares and assumption by Acquiring Fund of certain
identified liabilities of Selling Fund, or upon the distribution of such
Acquiring Fund voting shares to the shareholders of Selling Fund in exchange for
all of their Selling Fund shares.
No gain or loss will be recognized by Acquiring Fund upon the receipt of the
assets of Selling Fund (including any cash retained initially by Selling Fund to
pay liabilities but later transferred) solely in exchange for Acquiring Fund
voting shares and assumption by Acquiring Fund of certain identified liabilities
of Selling Fund.
The basis of the assets of Selling Fund acquired by Acquiring Fund will be the
same as the basis of those assets in the hands of Selling Fund immediately prior
to the transfer, and the holding period of the assets of Selling Fund in the
hands of Acquiring Fund will include the period during which those assets were
held by Selling Fund.
The shareholders of Selling Fund will recognize no gain or loss upon the
exchange of all of their Selling Fund shares solely for Acquiring Fund voting
shares. Gain, if any, will be realized by Selling Fund shareholders who in
exchange for their Selling Fund shares receive other property or money in
addition to Acquiring Fund shares, and will be recognized, but not in excess of
the amount of cash and the value of such other property received. If the
exchange has the effect of the distribution of a dividend, then the amount of
gain recognized that is not in excess of the ratable share of undistributed
earnings and profits of Selling Fund will be treated as a dividend.
The basis of the Acquiring Fund voting shares to be received by the Selling Fund
shareholders will be the same as the basis of the Selling Fund shares
surrendered in exchange therefor.
The holding period of the Acquiring Fund voting shares to be received by the
Selling Fund shareholders will include the period during which the Selling Fund
shares surrendered in exchange therefor were held, provided the Selling Fund
shares were held as a capital asset on the date of the exchange.
This opinion letter is delivered to you in satisfaction of the requirements of
sections 8.D. and 9.D. of the Agreement. We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement on Form N-14 and the use of
our name and any reference to our firm in the Registration Statement or in the
Prospectus/Proxy Statement constituting a part thereof. In giving such consent,
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ James H. Ellis, Esq.
James H. Ellis, Esq.
