(DECHERT LLP LOGO)
1095 Avenue of the Americas
New York, NY 10036-6797
+1 212 698 3500 Main
+1 212 698 3599 Fax
www.dechert.com
[FORM OF OPINION]
[__], 2009
Board of Trustees
The MainStay Funds
MainStay Small Cap Value Fund
51 Madison Avenue
New York, New York 10010
Board of Trustees
Eclipse Funds
MainStay Small Cap Opportunity Fund
51 Madison Avenue
New York, New York 10010
Dear Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax consequences
to MainStay Small Cap Value Fund (the "Acquired Fund"), a separate series of The
MainStay Funds, a Massachusetts business trust (the "MainStay Trust"), to the
holders of the shares of beneficial interest (the "Acquired Fund Shares") of
Acquired Fund (the "Acquired Fund Shareholders"), and to MainStay Small Cap
Opportunity Fund (the "Acquiring Fund"), a separate series of Eclipse Funds, a
Massachusetts business trust (the "Eclipse Trust"), in connection with the
proposed transfer of substantially all of the properties of Acquired Fund to
Acquiring Fund in exchange solely for voting shares of beneficial interest of
Acquiring Fund ("Acquiring Fund Shares") and the assumption of all liabilities
of Acquired Fund by Acquiring Fund, followed by the distribution of such
Acquiring Fund Shares received by Acquired Fund in complete liquidation and
termination of Acquired Fund (the "Reorganization"), all pursuant to the
Agreement and Plan of Reorganization (the
U.S. Austin Boston Charlotte Harrisburg Hartford New York Newport Beach Palo
Alto Philadelphia Princeton San Francisco Washington DC EUROPE Brussels London
Luxembourg Munich Paris
Page 2
(DECHERT LLP LOGO)
"Plan") dated as of [__], 2008 executed by the MainStay Trust on behalf of the
Acquired Fund and by the Eclipse Trust on behalf of the Acquiring Fund.
For purposes of this opinion, we have examined and relied upon (1) the
Plan, (2) the Form N-14 filed by Acquiring Fund on [__], 2008 with the
Securities and Exchange Commission, (3) the related Proxy Statement dated [__],
2008, (4) the facts and representations contained in the letter dated on or
about the date hereof addressed to us from Corporation on behalf of Acquiring
Fund, (5) the facts and representations contained in the letter dated on or
about the date hereof addressed to us from Corporation on behalf of Acquired
Fund, and (6) such other documents and instruments as we have deemed necessary
or appropriate for purposes of rendering this opinion.
This opinion is based upon the Internal Revenue Code of 1986, as amended
(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 the
Reorganization taking place in the manner described in the Plan and the Form
N-14 referred to above.
Based upon the foregoing, it is our opinion that:
1. The acquisition by Acquiring Fund of substantially all of the properties of
Acquired Fund in exchange solely for Acquiring Fund Shares and the
assumption of all liabilities of Acquired Fund by Acquiring Fund followed
by the distribution of Acquiring Fund Shares to the Acquired Fund
Shareholders in exchange for their Acquired Fund shares in complete
liquidation and termination of Acquired Fund will constitute a tax-free
reorganization under Section 368(a) of the Code.
2. Acquired Fund will not recognize gain or loss upon the transfer of
substantially all of its assets to Acquiring Fund in exchange solely for
Acquiring Fund Shares except to the extent that Acquired Fund's assets
consist of contracts described in Section 1256(b) of the Code ("Section
1256 Contracts"); Acquired Fund will be required to recognize gain or loss
on the transfer of any such Section 1256 Contracts to Acquiring Fund
pursuant to the Reorganization as if such Section 1256 Contracts were sold
to Acquiring Fund on the effective date of the Reorganization at their fair
market value.
Dechert LLP
Page 3
(DECHERT LLP LOGO)
3. Acquired Fund will not recognize gain or loss upon the distribution to its
shareholders of the Acquiring Fund Shares received by Acquired Fund in the
Reorganization.
4. Acquiring Fund will recognize no gain or loss upon receiving the properties
of Acquired Fund in exchange solely for Acquiring Fund Shares.
5. The adjusted basis to Acquiring Fund of the properties of Acquired Fund
received by Acquiring Fund in the reorganization will be the same as the
adjusted basis of those properties in the hands of Acquired Fund
immediately before the exchange.
6. Acquiring Fund's holding periods with respect to the properties of Acquired
Fund that Acquiring Fund acquires in the transaction will include the
respective periods for which those properties were held by Acquired Fund
(except where investment activities of Acquiring Fund have the effect of
reducing or eliminating a holding period with respect to an asset).
7. The Acquired Fund Shareholders will recognize no gain or loss upon
receiving Acquiring Fund Shares solely in exchange for Acquired Fund
Shares.
8. The basis of the Acquiring Fund Shares received by an Acquired Fund
Shareholder in the transaction will be the same as the basis of Acquired
Fund Shares surrendered by the Acquired Fund Shareholder in exchange
therefor.
9. An Acquired Fund Shareholder's holding period for the Acquiring Fund Shares
received by the Acquired Fund Shareholder in the transaction will include
the holding period during which the Acquired Fund Shareholder held Acquired
Fund Shares surrendered in exchange therefor, provided that the Acquired
Fund Shareholder held such shares as a capital asset on the date of
Reorganization.
We express no opinion as to the federal income tax consequences of the
Reorganization except as expressly set forth above, or as to any transaction
except those consummated in accordance with the Plan.
Very truly yours,
Dechert LLP