EXHIBIT 8.1
September 13, 2001
divine, inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Board of Directors
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of July 8, 2001 (the
"Merger Agreement") among divine, inc., a Delaware corporation ("Parent"),
DES Acquisition Company, a Delaware corporation and a wholly-owned subsidiary
of Parent ("Merger Sub"), and eshare communications, inc., a Georgia
corporation (the "Company"), which provides for the merger (the "Merger") of
the Company with and into Merger Sub on the terms and conditions therein set
forth, the time at which the Merger becomes effective being hereinafter
referred to as the "Effective Time." We have been requested to render this
opinion concerning certain material federal income tax consequences of the
Merger.
Except as otherwise provided, capitalized terms referred to herein have the
meanings set forth in the Merger Agreement. All section references, unless
otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the
"Code").
We have acted as legal counsel to Parent and Merger Sub in connection with
the Merger. As such, and for the purpose of rendering this opinion, we have
examined (or will examine on or prior to the Effective Time of the Merger)
and are relying (or will rely) upon (without any independent investigation or
review thereof) the truth and accuracy of the statements, covenants,
representations and warranties contained in the following documents
(including all schedules and exhibits thereto) at the Effective Time and at
all relevant times thereafter:
1. The Merger Agreement.
2. Representations made to us by Parent and Merger Sub, including
those representations made to us in the Officers' Certificate
from Parent and Merger Sub dated September 12, 2001.
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September 13, 2001
Page 2
3. Representations made to us by the Company, including those
representations made to us in the Officer's Certificate from
the Company dated September 12, 2001.
4. Parent's Registration Statement on Form S-4, filed September 13,
2001.
5. The following agreements (the "Private Transaction") by and
between Parent and Xxxxxxxxx Xxxxx, a shareholder of the Company,
and/or his affiliates (collectively, the "Controlling
Shareholder"): (i) Stockholders Agreement by and among Parent and
the Controlling Shareholder, dated July 8, 2001; (ii) a draft of
an Employment Agreement by and between Parent and Xxxxxxxxx
Xxxxx, and (iii) a draft of an Option to Purchase Agreement,
pursuant to which the Controlling Shareholder will grant Parent
an option to purchase certain real estate.
6. Such other instruments and documents related to the formation,
organization and operation of the Company, Parent and Merger Sub
or the consummation of the Merger and the transactions
contemplated by the Private Transaction as we have deemed
necessary or appropriate.
OPINION
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon, without any independent investigation
or review thereof) including that:
1. Original documents (including signatures) are authentic;
documents submitted to us as copies conform to the original
documents, and there has been (or will be by the Effective Time
of the Merger) due execution and delivery of all documents
where due execution and delivery are prerequisites to the
effectiveness thereof.
2. Parent, Merger Sub and the Company have entered into the Merger
Agreement for a valid business purpose.
3. Any representation or statement referred to above made "to the
actual knowledge of" or otherwise similarly qualified is correct
without such qualification.
4. The Merger will be consummated pursuant to the Merger Agreement
and will be effective under the applicable state law.
5. The Private Transaction will be consummated pursuant to the
agreements as drafted and executed by the parties on July 8,
2001, or if such agreements are not yet executed, such
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September 13, 2001
Page 3
agreements shall be executed in a form which is substantially
the same as the drafts of such agreements as of July 8, 2001.
6. As a result of the Merger, Merger Sub will acquire "substantially
all" of the Company's properties within the meaning of Section
368(a)(2)(D) of the Code and the regulations promulgated
thereunder.
7. The fair market value of the assets of the Company transferred to
Merger Sub in the Merger will equal or exceed the sum of the
Company's liabilities assumed by Merger Sub, plus the amount of
liabilities to which the transferred assets are subject.
8. Following the Merger, Merger Sub will continue the Company's
historic business or use a significant portion of the Company's
historic business assets in a business.
9. No outstanding indebtedness of the Company, Parent or Merger Sub
has represented or will represent equity for tax purposes
(including, without limitation, any loans from Parent to the
Company); no outstanding equity of the Company, Parent or Merger
Sub has represented or will represent indebtedness for tax
purposes; no outstanding security (other than the Company Option
Plans), instrument, agreement or arrangement that provides for,
contains, or represents either a right to acquire the Company
stock or to share in the appreciation thereof constitutes or will
constitute "stock" for purposes of Section 368(c) of the Code.
10. Each of Company, Parent and Merger Sub has paid and will pay only
its respective expenses, if any, incurred in connection with the
Merger, and neither Parent, Merger Sub nor Company has
agreed to assume, nor will it directly or indirectly assume, any
expense or other liability, whether fixed or contingent, of any
holder of Company Common Stock.
11. The fair market value of Parent Common Stock received by the
Company's stockholders will be equal to at least 50% of the fair
market value of the total consideration received by all of the
Company stockholders, including any consideration received, or
which can be received, by the Controlling Shareholder pursuant to
the Private Transaction.
12. Neither Parent, the Company nor Merger Sub is, or will be at the
time of the Merger: (a) an "investment company" within the
meaning of Section 368(a)(2)(F) of the Code; or (b) 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.
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September 13, 2001
Page 4
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, it
is our opinion, as legal counsel for Parent and Merger Sub, that for federal
income tax purposes the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and that Parent, Merger Sub, and the
Company will each be a party to such reorganization within the meaning of
Section 368(b) of the Code.
QUALIFICATIONS
In addition to the assumptions set forth above, this opinion is subject to the
exceptions, limitations and qualifications set forth below:
1. This opinion represents and is based upon our best judgment
regarding the application of federal income tax laws arising
under the Code, existing judicial decisions, administrative
regulations and published rulings and procedures. Our opinion is
not binding upon the Internal Revenue Service or the courts, and
the Internal Revenue Service may successfully assert a contrary
position. Furthermore, no assurance can be given that future
legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the
accuracy of the opinion expressed herein. Nevertheless, we
undertake no responsibility to advise you of any new developments
in the application or interpretation of the federal income tax
laws.
2. Our opinion concerning certain of the federal tax consequences of
the Merger is limited to the specific federal tax consequences
presented above. No opinion is expressed as to any transaction
other than the Merger, including the Private Transaction or any
transaction undertaken in connection with the Merger. In
addition, this opinion does not address any other federal,
estate, gift, state, local or foreign tax consequences that may
result from the Merger. In particular, we express no opinion
regarding:
(a) whether and the extent to which any Company stockholder who
has provided or will provide services to the Company, Parent
or Merger Sub will have compensation income under any
provision of the Code;
(b) the effects of such compensation income, including, but not
limited to, the effect upon the basis and the holding period
of the Parent Stock received by any such stockholder in the
Merger;
(c) whether and the extent to which the Controlling Shareholder
will receive any taxable income as a result of the Private
Transaction and the character of such income;
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September 13, 2001
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(c) the potential application of the "disqualifying disposition"
rules of Section 421 of the Code to dispositions of the
Company Common Stock;
(d) the tax consequences of Parent's assumption of outstanding
options to acquire the Company Common Stock on the holders
of such options under any Company employee stock option or
stock purchase plan;
(e) the effects of the Merger on any pension or other employee
benefit plan maintained by Parent or the Company;
(f) the potential application of the "golden parachute"
provisions of Sections 280G, 3121(v)(2) and 4999 of the
Code (including the applications of these provisions to
the Private Transaction), the alternative minimum tax
provisions of Sections 55, 56 and 57 of the Code or
Sections 108, 305, 306, 357 and 424 of the Code, or the
regulations promulgated thereunder;
(g) the survival and/or availability, after the Merger, of any
of the federal income tax attributes or elections of the
Company or Parent (including, without limitation, foreign
tax credits or net operating loss carryforwards, if any, of
the Company or Parent), after application of any provision
of the Code, as well as the regulations promulgated
thereunder and judicial interpretations thereof;
(h) the basis of any assets of the Company acquired by Merger
Sub in the Merger;
(i) the tax consequences of any transaction in which Company
Common Stock or a right to acquire Company Common Stock was
received; and
(j) the tax consequences of the Merger (including the opinion
set forth above) as applied to holders of options or
warrants to purchase Company Common Stock or that may be
relevant to particular classes of the Company stockholders
and/or holders of options or warrants for the Company Common
Stock, including, without limitation, dealers in securities,
corporate shareholders subject to the alternative minimum
tax, foreign persons, and holders of shares acquired upon
exercise of stock options or in other compensatory
transactions.
3. No opinion is expressed if all the transactions described in the
Merger Agreement and the Private Transaction are not consummated
in accordance with the terms of such Merger Agreement and the
Private Transaction and without waiver or breach of any material
provision thereof or if all of the representations, warranties,
statements and assumptions upon which we relied are not true and
accurate at all relevant times. In the event any one
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September 13, 2001
Page 6
of the statements, representations, warranties or assumptions
upon which we have relied to issue this opinion is incorrect, our
opinion might be adversely affected and may not be relied upon.
4. No ruling has been or will be requested from the Internal Revenue
Service concerning the federal income tax consequences of the
Merger. In reviewing this opinion, you should be aware that the
opinion set forth above represents our conclusions regarding the
application of existing federal income tax law to the instant
transaction. If the facts vary from those relied upon (including
if any representation, covenant, warranty or assumption upon
which we have relied is inaccurate, incomplete, breached or
ineffective), our opinion contained herein could be inapplicable.
You should be aware that an opinion of counsel represents only
counsel's best legal judgment, and has no binding effect or
official status of any kind, and that no assurance can be given
that contrary positions will not be taken by the Internal Revenue
Service or that a court considering the issues would not hold
otherwise.
5. This opinion is being delivered to you solely in connection with
the Merger. This opinion may not be relied upon or utilized for
any other purpose or by any other person or entity, including the
Company's stockholders, the Controlling Shareholder, and Parent's
stockholders, and may not be made available to any other person
or entity, without our prior written consent. We do, however,
consent to the filing of this opinion as an exhibit to the
Registration Statement and the reference to Xxxxxx Xxxxxx Xxxxx
in the Prospectus under the caption "United States Federal
Income Tax Consequences." In furnishing such consent, we do not
concede that we are within a category of persons whose consent
is required under Section 7 of the Securities Act of 1933, as
amended, or the rules or regulations of the Securities and
Exchange Commission promulgated thereunder.
Very truly yours,
XXXXXX XXXXXX ZAVIS
