1
EXHIBIT 8.1
January 9, 1997
Re: Agreement and Plan of Merger, dated as of
November 13, 1996, as amended by Amendment No. 1 thereto dated
as of January 8, 1997, among Xxxxxxx Incorporated,
FMC Acquisition Corporation and Fargo Mfg. Company, Inc.
Fargo Mfg. Company, Inc.
000 Xxxx Xxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxxxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
You have requested our opinion with respect to certain United States
federal income tax consequences of the proposed transaction in which FMC
Acquisition Corporation ("Merger Sub"), which is a newly-formed wholly-owned
subsidiary of Xxxxxxx Incorporated ("Parent"), will merge (the "Merger") with
and into Fargo Mfg. Company, Inc., ("Company"). All capitalized terms used but
not defined herein have the meanings ascribed to them in the Agreement and Plan
of Merger, dated as of November 13, 1996, as amended by Amendment No. 1 thereto
dated as of January 8, 1997, among Parent, Merger Sub and Company (the "Merger
Agreement").
In acting as counsel to Parent in connection with the Merger, we have,
in preparing our opinions, as hereinafter set forth, participated in the
preparation of the Merger Agreement and the preparation and filing with the
Securities and Exchange Commission of a Proxy Statement of Company and
Prospectus of Parent relating to the proposed Merger and to the shares of Class
B Common Stock to be issued to Company stockholders in the Merger Agreement
(the "Proxy Statement/Prospectus").
You have requested that we render the opinions set forth below. In
rendering such opinions, we have assumed with your consent (i) that the Merger
will be effected in accordance with the Merger Agreement, (ii) that at the time
of Closing we will receive (A) representation letters from Parent and Company
(forms of which are attached hereto as Exhibits A and B, respectively) and (B)
representation letters (a form of which is attached hereto as Exhibit C) from
Shareholders listed on Schedule 9.3(d) of the Merger Agreement who, in the
aggregate, own on (x) the date of the Merger Agreement and (y) the Closing Date
at least fifty percent of the issued and outstanding shares of Company Common
Stock and that such representation letters of Parent, Company and the
Shareholders will be true and accurate as of the date thereof and will remain
true and accurate as of the Effective Time unless we are otherwise notified in
writing and (iii) that the amount of cash required to be paid by Xxxxxxx or
Merger Sub to Dissenting Shares and pursuant to Sections 2.2(v)(B) and 3.1(f)
of the Merger Agreement does not exceed ten percent of the aggregate
consideration to be paid by Xxxxxxx or Merger Sub to the Shareholders pursuant
to the Merger Agreement. We have examined the documents referred to above and
the originals, or copies certified or otherwise identified to our satisfaction,
of such records, documents, certificates or other instruments and made such
other inquiries as in our judgment are necessary or appropriate to enable us to
render the opinions set forth below. We have not, however, undertaken any
independent investigation of any factual matter set forth in any of the
foregoing.
If the Merger is effected on a factual basis different from that
contemplated in the Merger Agreement, the opinions expressed herein may be
inapplicable. Our opinions are based on the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury Regulations, administrative interpretations, and
judicial precedents as of the date hereof. If there is any subsequent change in
the applicable law or regulations, or if there are subsequently any new
administrative or judicial interpretations of the law or regulations, the
opinions expressed herein may become inapplicable.
Subject to the foregoing and to the qualifications and limitations set
forth herein, and assuming that the Merger is consummated in accordance with
the Merger Agreement (and exhibits thereto) and the Delaware General
Corporation Law and as described in the Proxy Statement/Prospectus, we are of
the opinion that (i) for United States federal income tax purposes the Merger
will be treated as a reorganization within the meaning of section 368(a) of the
Code, and Parent, Merger Sub and Company will each be a party to that
reorganization within the meaning of section 368(b) of the Code and (ii) the
statements made in the Proxy Statement/Prospectus under the caption "The
Merger -- Certain Federal Income Tax Consequences," insofar as they purport to
constitute summaries of matters of United States federal tax law and
regulations or legal conclusions with respect thereto, constitute accurate
summaries of the matters described therein in all material respects.
We express our opinions herein only as to those matters specifically
set forth above and no opinion should be inferred as to the tax consequences of
the Merger under any state, local or foreign law, or with respect to other
areas of United States federal taxation. We are members of the Bar of the State
of New York, and we do not express any opinion herein concerning any law other
than the federal law of the United States. This opinion letter is rendered to
you in connection with the above described transaction. This opinion letter may
not be relied upon by you for any other purpose, or relied upon by, or
furnished to, any other person, firm or corporation without our prior written
consent. This opinion has been delivered to you as required under Section
9.3(d) of the Merger Agreement and we hereby consent to the filing of this
opinion as an exhibit to the Registration Statement on Form S-4 filed by Parent
in connection with the Class B Common Stock to be issued in the Merger and to
the use of our name under the caption "The "Merger -- Certain Federal Income
Tax Consequences" and "Legal Opinions" in the Proxy Statement/Prospectus.
Very truly yours,
/s/ Xxxxxxx Xxxxxxx & Xxxxxxxx
XXXXXXX XXXXXXX & XXXXXXXX
2
EXHIBIT A TO EXHIBIT 8.1
[Xxxxxxx Incorporated Letterhead]
[ ], 1997
Re: Agreement and Plan of Merger,
dated as of November 13, 1996, as amended by Amendment
No. 1 thereto dated as of January 8, 1997, among
Xxxxxxx Incorporated, FMC Acquisition Corporation and
Fargo Mfg. Company, Inc.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The following facts and representations are being furnished to you in
connection with the preparation of your tax opinion to be provided in connection
with the Merger. We understand that you will be relying on such facts and
representations in delivering your opinion and that the delivery of such opinion
is a condition precedent to the Merger. Unless otherwise defined herein,
capitalized terms shall have the meanings ascribed to them in the Agreement and
Plan of Merger, dated as of November 13, 1996, as amended by Amendment No. 1
thereto dated as of January 8, 1997, among Xxxxxxx Incorporated ("Parent"), FMC
Acquisition Corporation ("Merger Sub") and Fargo Mfg. Company, Inc., ("Company")
(the "Merger Agreement").
Assuming the Merger will be effected in accordance with the Merger
Agreement, the following facts and representations are true and accurate as of
the date hereof and you may assume that such facts and representations remain
true and accurate as of the Effective Time unless we otherwise notify you in
writing:
1. The fair market value of the Class B Common Stock and other
consideration received by each holder of Company Common Stock will be
approximately equal to the fair market value of the Company Common Stock
surrendered in the Merger.
2. Following the Merger, Company will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets and at least 90 percent of the fair market value of
Merger Sub's net assets and at least 70 percent of the fair market value of
Merger Sub's gross assets held immediately prior to the Merger. For purposes of
this representation, amounts paid by Company or Merger Sub to dissenters,
amounts paid by Company or Merger Sub to holders of Company Common Stock who
receive cash or other property, amounts used by Company or Merger Sub to pay
reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) made by Company, will be included as assets of
Company or Merger Sub, respectively, held immediately prior to the Merger.
3. Prior to the Merger, Parent will be in control of Merger Sub within
the meaning of Section 368(c) of the Code.
4. Parent has no plan or intention to cause Company after the Merger
to issue additional shares of its stock that would result in Parent losing
control of Company within the meaning of Section 368(c) of the Code.
5. Parent has no plan or intention ot reacquire any of the Class B
Common Stock issued in the Merger.
6. Parent has no plan or intention to liquidate Company; to merge
Company with or into another corporation; to sell or otherwise dispose of
Company Common Stock except for transfers of Company Common Stock to
corporations controlled by Parent; or to cause Company to sell or otherwise
dispose of any of its assets or any of the assets acquired from Merger Sub,
except for dispositions made in the ordinary course of business or transfers
described in Section 368(a)(2)(C) of the Code.
7. Merger Sub will have no liabilities assumed by Company, and will
not transfer to Company any assets subject to liabilities, in the Merger.
8. Following the Merger, Company will continue its historic business
or use a significant portion of its historic business assets in a business.
9. Parent, Merger Sub and Company will pay their respective expenses,
if any, incurred in connection with the Merger.
10. There is no intercoporate indebtedness existing between Parent and
Company or between Merger Sub and Company that was issued, acquired or has been
settled at a discount.
11. Parent does not own, nor has it owned during the past five years,
any Company Common Stock.
12. Neither Parent nor Merger Sub are investment companies as defined
in Section 368(a)(2)(F)(iii) and (iv) of the Code.
13. The payment of cash in lieu of fractional shares of Class B Common
Stock was not separately bargained for consideration, and is being made for
the sole purpose of saving Parent the expense and inconvenience of issuing
fractional shares. The fractional share interests of each holder of Company
Common Stock will be aggregated, and no holder of Company Common Stock will
receive cash in an amount greater than the value of one full share of Class B
Common Stock.
14. None of the compensation received by any stockholder-employee of
Company pursuant to any employment, consulting or similar arrangement is or
will be separate consideration for, or allocable to, any of his/her Company
Common Stock. None of the shares of Class B Common Stock received by any
stockholder-employee of Company pursuant to the Merger is nor will be separate
consideration for, or allocable to, any such employment, consulting or similar
arrangement. The compensation paid to any stockholder-employee of Company
pursuant to any such employment, consulting or similar arrangement is or will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
Parent acknowledges that your tax opinion may not accurately describe
the effects of the Merger if any of the foregoing facts or representations are
inaccurate.
Very truly yours,
Xxxxxxx Incorporated
_______________________________
By:
Title:
3
Exhibit B to Exhibit 8.1
-------------------------
[Fargo Mfg. Company Letterhead]
[ ], 1997
Re: Agreement and Plan of Merger,
dated as of November 13, 1996, as amended by Amendment
No. 1 thereto dated as of January 8, 1997, among
Xxxxxxx Incorporated, FMC Acquisition
Corporation and Fargo Mfg. Company, Inc.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The following facts and representations are being furnished to you in
connection with the preparation of your tax opinion to be provided in
connection with the Merger. We understand that you will be relying on such
facts and representations in delivering your opinion and that the delivery of
such opionion is a condition precedent to the Merger. Unless otherwise defined
herein, capitalized terms shall have the meanings ascribed to them in the
Agreement and Plan of Merger, dated as of November 13, 1996, as amended by
Amendment No. 1 thereto dated as of January 8, 1997, among Xxxxxxx
Incorporated ("Parent"), FMC Acquisition Corporation ("Merger Sub") and Fargo
Mfg. Company, Inc., ("Company") (the "Merger Agreement").
Assuming the Merger will be effected in accordance with the Merger
Agreement, the following facts and representations are true and accurate as of
the date hereof and you may assume that such facts and representations remain
true and accurate as of the Effective Time unless we otherwise notify you in
writing:
1. The fair market value of the Class B Common Stock and other
consideration received by each holder of Company Common Stock will be
approximately equal to the fair market value of the Company Common Stock
surrendered in the Merger.
2. There is no plan or intention by the holders of Company Common
Stock who own (either directly or through attribution) 1 percent or more of the
Company Common Stock, and to the best of the knowledge of the management of
Company there is no plan or intention on the part of the remaining holders of
Company Common Stock to sell, exchange, or otherwise dispose of a number of
shares of Class B Common Stock received in the Merger that would, in the
aggregate, reduce the ownership of Class B Common Stock by the former holders
of the Company Common Stock to a number of shares having a value, as of the
Effective Time, of less than fifty percent (50%) of the value of all the
formerly outstanding stock of Company as of the same date. For purposes of this
representation, shares of Company Common Stock exchanged for cash or other
property (including any amounts received pursuant to section 2.2(v)(B) of the
Merger Agreement), surrendered by dissenters or exchanged for cash in lieu of
fractional share interests of Class B Common Stock will be treated as
outstanding Company Common Stock on the date of the Merger. Moreover, shares of
Company Common Stock and Class B Common Stock held by holders of Company Common
Stock and otherwise sold, redeemed or disposed of prior or subsequent to and as
part of the overall plan of Merger will be considered in making this
representation. Except as set forth in Exhibit A to this letter, to the best of
the knowledge of the management of the Company, there are no holders of Company
Common Stock who own 1 percent or more of the Company Common Stock on the date
hereof.
3. Following the Merger, Company will hold at least 90 percent of the
fair market value of its net assets and at least 70 percent of the fair market
value of its gross assets held immediately prior to the Merger. For puposes of
this representation, amounts paid by Company to dissenters, amounts paid by
Company to holders of Company Common Stock who receive cash or other prpoperty,
amounts used by Company to pay reorganization expenses, and all redemptions and
distributions (except for regular, normal dividends) made by Company, will be
included as assets of Company held immediately prior to the Merger.
4. Company and the holders of Company Common Stock will pay their
respective expenses, if any, incurred in connection with the Merger.
5. There is no intercorporate indebtedness existing between Parent and
Company or between Merger Sub and Company that was issued, acquired or has been
settled at a discount.
6. In the Merger, Company Common Stock representing control of Company
(as defined in Section 368(c) of the Code) will be exchanged solely for voting
stock of Parent. For purposes of this representation, Company Common Stock
exchanged for cash or other property originating with Parent (including, but
not limited to, amounts paid to dissenters, amounts paid in lieu of fractional
share interests of Class B Common Stock and amounts paid pursuant to section
2.2(v)(B) of the Merger Agreement) will be treated as outstanding Company
Common Stock at the time of the Merger.
7. Company does not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any person could
acquire stock in Company that, if exercised or converted, would affect Parent's
acquisition or retention of control of Company within the meaning of Section
368(c) of the Code.
8. Company is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
9. The fair market value of the assets of the Company exceeds the sum
of its liabilities, plus the amount of liabilities, if any, to which the assets
are subject.
10. Company 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 Code.
11. The payment of cash in lieu of fractional shares of Class B Common
Stock was not separately bargained for consideration, and is being made for
the sole purpose of saving Parent the expense and inconvenience of issuing
fractional shares.
12. None of the compensation received by any stockholder-employee of
Company pursuant to any employment, consulting or similar arrangement is or
will be separate consideration for, or allocable to, any of his/her Company
Common Stock. None of the shares of Class B Common Stock received by any
stockholder-employee of Company pursuant to the Merger is or will be separate
consideration for, or allocable to, any such employment, consulting or similar
arrangement. The compensation paid to any stockholder-employee of Company
pursuant to any such employment, consulting or similar arrangement is or will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
Company acknowledges that your tax opinion may not accurately describe
the effects of the Merger if any of the foregoing facts or representations are
inaccurate.
Very truly yours,
Fargo Mfg. Company, Inc.
--------------------------
By:
Title:
4
Exhibit A to Exhibit B to Exhibit 8.1
Approximate Percentage of
Name Company Common Stock
---- --------------------
5
Exhibit C to Exhibit 8.1
------------------------
[Shareholder Representation Letter]
[ ], 1997
Re: Agreement and Plan of Merger, dated as of November 13, 1996,
as amended by Amendment No. 1 thereto dated as of January 8, 1997,
among Xxxxxxx Incorporated, FMC Acquisition Corporation
and Fargo Mfg. Company, Inc.
----------------------------
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
The following representation is being furnished to you in connection
with the preparation of your tax opinion to be provided in connection with the
Merger. I understand that you will be relying on such representation in
delivering your opinion and that the delivery of such opinion is a condition
precedent to the Merger. Unless otherwise defined herein, capitalized terms
shall have the meanings ascribed to them in the Agreement and Plan of Merger,
dated as of November 13, 1996, as amended by Amendment No. 1 thereto dated as
of January 8, 1997, among Xxxxxxx Incorporated ("Parent"), FMC Acquisition
Corporation ("Merger Sub") and Fargo Mfg. Company, Inc., ("Company") (the
"Merger Agreement").
Assuming the Merger will be effected in accordance with the Merger
Agreement, the following representation is true and accurate as of the date
hereof and you may assume that such representation remains true and accurate as
of the Effective Time unless I otherwise notify you in writing:
1. I have no plan or intention to, directly or indirectly, offer, sell,
transfer, tender, pledge or encumber (except on a recourse basis),
assign or otherwise dispose of, or enter into any contract, option
or other arrangement with respect to, or consent to the sale,
transfer, pledge or encumbrance (except on a recourse basis),
assignment or other disposition of ________ shares of the Class B
Common Stock that I receive in the Merger (the "Restricted
Shares").1/; and
2. The shares of Company Common Stock in exchange for which I received
the Restricted Shares were not acquired in contemplation of the
Merger and have been held by me at all times since November 13,
1996.
I acknowledge that your tax opinion may not accurately describe the
effects of the Merger if the foregoing representation is inaccurate.
Very truly yours,
[Shareholder]
_________________________________
___________
1/ The amount of Restricted Shares to which each shareholder representation
letter pertains will be determined so that, in the aggregate, the number of
Restricted Shares have a value equal to or greater than fifty percent of the
value of all the formerly outstanding shares of Company Common Stock.
