EXHIBIT 8
May 14, 1999
Board of Directors
Pennsylvania Commerce Bancorp, Inc.
000 Xxxxxx Xxxxxx
P. O. Box 8599
Camp Hill, PA 17001
Board of Directors
Commerce Bank/Harrisburg, N.A.
000 Xxxxxx Xxxxxx
P. O. Box 8599
Camp Hill, PA 17001
Re: Agreement and Plan of Reorganization / Agreement and Plan of Merger
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of a proposed reorganization involving Pennsylvania Commerce
Bancorp, Inc. (the "Corporation"), a Pennsylvania corporation; Commerce
Bank/Harrisburg Interim National Bank ("Interim Bank"), a newly formed national
banking association and wholly owned subsidiary of the Corporation; and Commerce
Bank/Harrisburg, N.A. ("Commerce"), a national banking association. The
reorganization is described in the Proxy Statement/Prospectus dated May 14, 1999
and in the Agreement and Plan of Reorganization and the Agreement and Plan of
Merger, both dated April 23, 1999 (the "Reorganization Agreement"). Commerce
has, and after the reorganization is consummated the Corporation will have,
voting common stock and nonvoting preferred stock outstanding.
Pursuant to and in accordance with the National Bank Act, Commerce will be
merged into Interim Bank (the "Merger") and the resulting entity will continue
under the name "Commerce Bank/Harrisburg, N.A.". As a result of the Merger,
Interim Bank will succeed to all of the assets of Commerce, subject to all of
the liabilities of Commerce.
Each share of outstanding stock of Commerce will be exchanged for one
share of stock of the Corporation as provided in the Reorganization Agreement,
except for shares of Commerce held by shareholders who exercise their dissenters
rights. Dissenting shareholders may surrender their Commerce stock to the
Corporation and receive cash payments representing the fair market value of such
stock, subject to the provisions of the National Bank Act.
Shareholders of Commerce who would have otherwise been entitled to a
fraction of a share of the Corporation common stock will be paid an amount in
cash equal to such fraction multiplied by the "market value per share" as
defined in the Reorganization Agreement for one (1) whole share of the
Corporation common stock. The cash received by dissenting shareholders and by
shareholders who receive cash in lieu of fractional shares will be provided by
the Corporation.
In connection with the proposed Merger and related transactions you have
made the following representations to us:
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 date of the Merger) due execution and delivery of all
documents where due execution and delivery are prerequisites to the
effectiveness thereof.
2. The Merger will be effective under the National Bank Act.
3. The total fair market value of the Corporation stock and cash received
by Commerce shareholders will be approximately equal to the fair market value of
the Commerce stock surrendered in the Merger.
4. To the best knowledge of Commerce management, there is no plan or
intention on the part of Commerce shareholders to sell, exchange, or otherwise
dispose of a number of shares of the Corporation common stock received in the
Merger that would reduce Commerce' shareholders' ownership of the Corporation
common stock to a number of shares having a value, as of the date of the Merger
of less than eighty (80%) percent of the value of all of the formerly
outstanding Commerce stock as of the same date. For this purpose, shares of
Commerce common stock exchanged for cash in exercise of dissenters' rights or in
lieu of fractional shares of the Corporation common stock are treated as
outstanding Commerce stock on the date of the Merger. Moreover, Commerce stock
and the Corporation stock held by Commerce shareholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the transaction have been taken
into account in making this representation.
5. The Corporation has no plan or intention to reacquire any of its stock
issued in the Merger or make any extraordinary distribution in respect of its
stock.
6. Interim Bank has no plan or intention to sell or otherwise dispose of
any of its assets or the assets of Commerce acquired in the Merger, except for
dispositions made in the ordinary course of business.
7. The liabilities of Commerce were incurred by Commerce in the ordinary
course of its business.
8. Following the Merger, Interim Bank will continue its historic business
or use a significant portion of its historic business assets in a business.
9. The Corporation, Commerce, and the Commerce shareholders will pay their
respective expenses, if any, incurred in connection with the transaction (other
than expenses of Commerce assumed by Interim Bank pursuant to the Merger).
10. There is no intercorporate indebtedness existing between Commerce and
the Corporation or its subsidiaries that was issued, acquired, or will be
settled at a discount.
11. Neither The Corporation nor Interim Bank is an investment company as
defined in Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code of
1986 as amended (the "Code").
12. Neither the Corporation nor Commerce is 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.
13. Commerce shareholders will receive and retain a meaningful continuing
equity ownership in the Corporation that is sufficient to satisfy the continuity
of interest requirement as specified in Treas. Reg. ss.1.368-1(b) and as
interpreted in certain Internal Revenue Service rulings and federal judicial
decisions.
14. After the Merger, Interim Bank will continue to hold "substantially
all" of Commerce's properties acquired in the Merger within the meaning of
Section 368(a)(2)(E) of the Code and the regulations promulgated thereunder.
15. None of the compensation to be received by any Commerce
shareholder-employee pursuant to any employment agreement or any covenants not
to compete will be separate consideration for, or allocable to, any of their
shares of the Corporation stock; the compensation to be paid to any Commerce
shareholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
16. No distributions will have been made by Commerce with respect to its
stock preceding the proposed transaction other than distributions consistent in
amount and in effect with prior dividend policy.
17. The issuance of cash in lieu of fractional shares merely represents
the mechanical rounding off of the fractional share interests. It is undertaken
solely for the purpose of saving the Corporation the expense and inconvenience
of issuing and transferring fractional shares, and is not separately bargained
for consideration. The aggregate amount of cash to be issued in lieu of
fractional shares is anticipated to be less than one (1%) percent of the total
value of the Corporation common stock received by Commerce shareholders.
18. Commerce has not redeemed any of its capital stock within the last
three (3) years.
19. The common stock of the Corporation to be received by the shareholders
of Commerce is not subject to put or call options.
Based on our understanding of the pertinent facts as set forth above and
applicable law, as enacted and construed on the date hereof, it is our opinion
that:
(i) the Merger of Commerce with and into Interim Bank in accordance with
the Reorganization Agreement will constitute a reorganization within
the meaning of Section 368(a) of the Code, and each of Commerce,
Interim Bank, and the Corporation will be a "party to a
reorganization" within the meaning of Section 368(b) of the Code;
(ii) no gain or loss will be recognized by Commerce, Interim Bank, or the
Corporation as a result of the Merger;
(iii) except for cash received in lieu of fractional shares, no gain or
loss will be recognized by the shareholders of Commerce who receive
solely the
Corporation common stock upon the exchange of their shares of
Commerce common stock for shares of the Corporation common stock;
(iv) the basis of the Corporation stock to be received by the Commerce
shareholders will be, in each instance, the same as the basis of the
Commerce stock surrendered in exchange therefor;
(v) to the extent that Commerce stock is held as capital asset, the
holding period of the Corporation stock received by the shareholders
of Commerce receiving the Corporation stock will include the period
during which the Commerce stock surrendered in exchange therefor was
held;
(vi) to the extent that they hold their Commerce stock as capital assets,
cash received by Commerce shareholders in lieu of a fractional share
interest in the Corporation stock will be treated as having been
received as a distribution in full payment for such fractional share
interest in the Corporation stock, subject to the provisions of
Section 302(a) of the Code.
We are pleased to offer this opinion based on the federal income tax laws
as of this date. No assurances can be provided as to future changes in
administrative or judicial interpretations of these laws. No opinion is
expressed with respect to state and local taxes, federal, or state securities
law and other federal or state law not expressly referred herein.
We hereby consent to the filing of this opinion as an Exhibit to the
aforementioned Registration Statement. In giving this opinion, we do not thereby
admit that we are acting within the category of persons whose consent is
required under Section 7 of the Act or the rules or regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
Xxxxx X. Xxxx
