[N-14 EXHIBIT FORM OF TAX OPINION]
December ____, 2000
PBHG International Fund
The PBHG Funds, Inc.
P.O. Box 219534
Kansas City, Missouri 64121-9543
PBHG Global Technology & Communications Fund
The PBHG Funds, Inc.
P.O. Box 219534
Kansas City, Missouri 64121-9543
Re: Proposed Transfer of Assets - Federal Income Tax Consequences
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Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences to (1) PBHG International Fund (the "Fund"), an investment
portfolio of The PBHG Funds, Inc. (the "Company"), and (2) PBHG Global
Technology & Communications Fund (the "GTC Fund"), also an investment portfolio
of the Company, in connection with the proposed transfer of substantially all of
the properties of the Fund to the GTC Fund in exchange solely for voting shares
of the GTC Fund (the "Shares"), followed by the actual or constructive
distribution of the Shares received by the Fund and of any money and other
property of the Fund in complete liquidation and termination of the Fund (the
"Transaction"), all pursuant to the Plan of Reorganization adopted by the Board
of Directors of the Company on October 16, 2000 (the "Plan").
For purposes of this opinion, we have examined and rely upon the Plan,
the description of the transaction set forth in the Registration Statement on
Form N-14 filed by the Company on or about ______________, 2000 with the
Securities and Exchange Commission (the "Filing"), and such other documents and
instruments as we have deemed necessary or appropriate.
This opinion is based upon the assumption that, as has been represented
to us, (a) there is no plan or intention on the part of the shareholders of the
Fund to sell, exchange, redeem, transfer by gift or otherwise dispose of a
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number of shares of the GTC Fund received in the Transaction that would, when
aggregated with transfers of shares of the Fund prior to the Effective Time (as
defined in the Plan) that are made in contemplation of the Transaction, reduce
the ownership by the shareholders of the Fund to a number of shares of the GTC
Fund having a value, as of the Exchange Date, of less than fifty percent (50%)
of the total value of all the shares of the Fund outstanding immediately prior
to the Transaction; and (b) the GTC Fund and the Fund will each separately
qualify and be treated as regulated investment companies under Subchapter M of
Chapter 1 of the Internal Revenue Code of 1986, as amended (the "Code") for
their respective taxable years that include the closing date of the Transaction.
If these assumptions are not correct, the Transaction may not qualify as a
tax-free reorganization and, therefore, our opinion could be altered. For
purposes of rendering this opinion, we have not been requested to undertake, nor
have we undertaken, any investigation or inquiry as to whether these assumptions
are and will be correct.
This opinion is based upon the Code, United States Treasury
regulations, judicial decisions and administrative rulings and pronouncements of
the Internal Revenue Service, all as in effect on the date hereof. This opinion
is conditioned upon (a) the Transaction taking place in the manner described in
the Plan and (b) there being no change in the Code, United States Treasury
regulations, judicial decisions, or administrative rulings and pronouncements of
the Internal Revenue Service between the date hereof and the Effective Time.
This opinion is further conditioned upon our receiving such executed
letters of representation as we shall request. We have not been asked to, nor
have we undertaken to, verify the accuracy of any representations made to us and
the inaccuracy of any representation could alter our opinion. This opinion shall
be effective only at such time as we receive those letters and confirm our
opinion in writing at the Effective Time, and in the absence of such
confirmation, will be deemed to have been withdrawn.
Based upon and subject to the foregoing, it is our opinion that, for
federal income tax purposes:
1. The transfer of the assets of the Fund to the GTC Fund in exchange
for the Shares, and the constructive distribution of the Shares to the
shareholders of the Fund in complete liquidation of the Fund, as provided in the
Plan, will constitute a "reorganization" within the meaning of Section
368(a)(1)(C) of the Code and the Fund and the GTC Fund will each be "a party to
a reorganization" within the meaning of Section 368(b) of the Code;
2. In accordance with Section 361(a) and Section 361(c)(1) of the Code,
no gain or loss will be recognized by the Fund as a result of such transaction;
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3. In accordance with Section 354(a)(1) of the Code, no gain or loss
will be recognized by the shareholders of the Fund on the constructive
distribution to them by the Fund of the Shares in exchange for their shares of
the Fund;
4. In accordance with Section 358(a) of the Code, a shareholder's basis
for the Shares constructively distributed to him will be the same as his basis
for the shares of the Fund surrendered in exchange therefor;
5. In accordance with Section 1223(1) of the Code, a shareholder's
holding period for the Shares constructively distributed to him will be
determined by including such shareholder's holding period for the shares of the
Fund exchanged therefor, provided that the shareholder held such shares of the
Fund as a capital asset;
6. In accordance with Section 1032 of the Code, no gain or loss will be
recognized by the GTC Fund upon the receipt of assets of the Fund in exchange
for the Shares;
7. In accordance with Section 362(b) of the Code, the basis to the GTC
Fund of the assets of the Fund transferred to it will be, in each instance, the
same as the basis of such assets in the hands of the Fund immediately prior to
the exchange;
8. In accordance with Section 1223(2) of the Code, the holding period
of the GTC Fund with respect to the assets of the Fund transferred to it will
include the holding period for such assets in the hands of the Fund; and
9. In accordance with Section 381(a)(2) of the Code, the GTC Fund will
succeed to and take into account the items of the Fund described in Section
381(c) of the Code, subject to the conditions and limitations specified in
Sections 381 through 384 of the Code and the Treasury regulations thereunder.
We express no opinion as to the tax consequences of the Transaction
except as expressly set forth above, or as to any transaction except the
Transaction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form N-14 referred to above and filed by the Company
with the Securities and Exchange Commission.
Very truly yours,
[UNSIGNED]
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