[LETTERHEAD APPEARS HERE]
February 9, 2000
Napa National Bancorp
000 Xxxx Xxxxxx
Xxxx, XX 00000
Ladies and Gentlemen:
This opinion is being delivered to you pursuant to the Agreement and
Plan of Reorganization dated as of November 18, 1999, and amended as of January
18, 2000 (the "Agreement"), between Xxxxx Fargo & Company, a Delaware
corporation ("Parent"), and Napa National Bancorp, a California corporation
("Target"). Pursuant to the Agreement, Xxxxx Fargo NNB Merger Co., a wholly
owned subsidiary of Parent ("Merger Sub"), will merge with and into Target (the
"Merger"), and Target will become a wholly owned subsidiary of Parent.
Except as otherwise provided, capitalized terms referred to herein
have the meanings set forth in the 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 Target in connection with the
Merger. As such, and for the purpose of rendering this opinion, we have
examined and are relying upon (without any independent investigation or review
thereof) the truth and accuracy, at all relevant times, of the statements,
covenants, representations and warranties contained in the following documents
(including all schedules and exhibits thereto):
1. The Agreement.
2. The Registration Statement prepared in connection with the Merger.
3. Representation letters provided by Xxxxxx and Target in connection
with this opinion and attached to this letter.
4. Such other instruments and documents related to Parent, Target,
Merger Sub and the Merger as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon, without any independent investigation
or review thereof) that:
A. 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
effectiveness thereof.
Napa National Bancorp [Logo] Page 2
B. The Merger will be consummated in accordance with the Agreement
(without any waiver, breach or amendment of any of the provisions thereof) and
will be effective under applicable state law.
X. Xxxxxx and Target will report the Merger on their respective
federal income tax returns in a manner consistent with the opinion set forth
below.
D. Any statement made "to the knowledge of" or otherwise similarly
qualified is correct without such qualification. As to all matters with respect
to which a person or entity making a representation has represented that such
person or entity either is not a party to, does not have, or is not aware of any
plan, intention, understanding or agreement to take an action, there is in fact
no plan, intent, understanding or agreement and such action will not be taken.
E. All statements, descriptions and representations contained in any
of the documents referred to herein or otherwise made to us are true and correct
in all material respects and no actions have been (or will be) taken which are
inconsistent with such representations.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that:
(1) For federal income tax purposes, the Merger will constitute a
"reorganization" as defined in Section 368(a) of the Code.
(2) No taxable gain or loss will be recognized by the holders of
Target common stock upon the receipt of Parent common stock in exchange for
their Target common stock in the Merger (except for cash received in lieu of
fractional shares).
(3) A holder of Target common stock will have a tax basis in the
Parent common stock he or she receives in the Merger equal to the tax basis of
the exchanged shares of Target common stock (reduced by any tax basis allocable
to fractional shares for which cash is received).
(4) The holding period for the Parent common stock received by a
holder of Target common stock in the Merger will include the holder's holding
period in the exchanged shares of Target common stock; provided such shares of
Target common stock are held as a capital asset at the Effective Time of the
Merger.
No opinion is expressed as to any transaction other than the Merger as
described in the Agreement or to any transaction whatsoever (including the
Merger) if all the transactions described in the Agreement are not consummated
in accordance with the terms of the Agreement and without waiver or breach of
any material provision thereof, or if any of the representations, warranties,
statements and assump-
Napa National Bancorp [Logo] Page 3
tions upon which we relied is not true and accurate at all relevant times. In
the event any one 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.
This opinion letter addresses only the classification of the Merger as
a reorganization under Section 368(a) of the Code and the other matters
specifically stated above. This opinion letter does not address any other
federal, state, local or foreign tax consequences that may result from the
Merger or any other transaction (including any other transaction undertaken in
connection with the Merger or in contemplation of the Merger). In particular,
we express no opinion regarding (i) whether and the extent to which any Target
shareholder who has provided or will provide services to Target or Parent will
have compensation income under any provision of the Code as a result of the
receipt of Parent common stock or otherwise; (ii) the tax consequences of the
Merger (or any other transaction) to holders of options, warrants or other
rights to acquire Target stock; (iii) any state, local or foreign tax
consequences of the Merger; (iv) the tax consequences of the Merger as applied
to specific shareholders of Target or that may be relevant to particular classes
of Target shareholders such as dealers in securities, foreign persons and
holders of shares acquired upon exercise of stock options or in other
compensatory transactions; or (v) the tax consequences of the exchange of Target
options for Parent stock in the Merger.
This opinion letter represents our best judgment regarding the
application of federal income tax laws based on current provisions of the Code
and existing judicial decisions, administrative regulations and published
rulings and procedures. Our opinion is not binding upon the Internal Revenue
Service or the courts, and there is no assurance that the Internal Revenue
Service will not 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, will not adversely affect
the accuracy of the conclusions stated herein. Nevertheless, we undertake no
responsibility to advise you of any new developments in the application or
interpretation of the federal income tax laws.
This opinion is given for the purposes of satisfying a closing
condition set forth in the Agreement and serving as an exhibit to the
Registration Statement. This opinion is intended solely for your benefit. It
may not be relied upon for any other purpose or by any other person or entity
and may not be made available to any other person or entity without our prior
written consent.
Very truly yours,
/s/ XXXXXXX, XXXXXXX & XXXXXXXX LLP
Attachment
NAPA NATIONAL BANCORP
February 9, 2000
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxxxx Street Tower
Xxx Xxxxxx
Xxx Xxxxxxxxx, XX 94105
Re: Merger pursuant to the Agreement and Plan of Reorganization (the
"Agreement") dated as of November 18, 1999, and amended as of January
18, 2000, among Xxxxx Fargo & Company, a Delaware corporation
("Parent"), and Napa National Bancorp, a California corporation
("Target")
Ladies and Gentlemen:
This letter is supplied to you in connection with your rendering of an
opinion pursuant to the Agreement regarding certain federal income tax
consequences of the above-captioned merger (the "Merger"). Unless otherwise
indicated, capitalized terms not defined herein have the meanings set forth in
the Agreement.
A. Representations
After consulting with its counsel and auditors regarding the meaning
of and factual support for the following representations, the undersigned hereby
certifies and represents that the following facts are now true and will continue
to be true through the Effective Time of the Merger:
1. Pursuant to the Merger, Xxxxx Fargo NNB Merger Co., a wholly owned
subsidiary of Parent "Merger Sub") will merge with and into Target, and Target
will acquire all of the assets and liabilities of Merger Sub. At least ninety
percent (90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held by Target
immediately prior to the Merger, and at least ninety percent (90%) of the fair
market value of the net assets and seventy percent (70%) of the fair market
value of the gross assets held by Merger Sub immediately prior to the Merger
will be held by Target after the Merger. For the purpose of determining the
percentage of net and gross assets held by Target immediately following the
Merger, the following assets will be treated as property held by Target or
Merger Sub, as the case may be, immediately prior to the Merger but not by
Target subsequent to the Merger: (i) assets disposed of by Target or Merger Sub
(other than assets transferred by Merger Sub to Target in the Merger) prior to
or subsequent to the Merger and in contemplation thereof (including, without
limitation, any asset disposed of by Target or Merger Sub, other than in the
ordinary course of business, pursuant to a plan or intent existing during the
Napa National Bancorp
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 2
period ending at the Effective Time and beginning with the commencement of
negotiations (whether formal or informal) with Parent regarding the Merger (the
"Pre-Merger Period")), (ii) assets used by Target or Merger Sub to pay other
expenses or liabilities incurred in connection with the Merger, (iii) assets
used by Target or Merger Sub to make payments to dissenting Target shareholders
and to Target shareholders in lieu of fractional shares of Parent stock, and
(iv) assets used by Target or Merger Sub to make distribution, redemption or
other payments in respect of Target stock or rights to acquire such stock
(including payments treated as such for tax purposes) that are made in
contemplation of the Merger or related thereto;
2. Target has made no transfer of any of its assets (including any
distribution of assets with respect to, or in redemption of, stock) in
contemplation of the Merger or during the Pre-Merger Period other than (i) in
the ordinary course of business and (ii) payments for expenses incurred in
connection with the Merger;
3. The Merger is being undertaken for business reasons and not for
the purpose of tax avoidance;
4. At the time of the Merger, except as specified or disclosed in the
Agreement or in a schedule or exhibit to the Agreement, Target will not have any
stock or any other equity interests outstanding and will not have any warrants,
options, convertible securities or any other type of right outstanding pursuant
to which any person could acquire any shares of Target stock or any other equity
interest in Target;
5. In the Merger, shares of Target stock representing "Control" of
Target will be exchanged solely for voting stock of Parent. For purposes of this
certificate, shares of Target stock exchanged in the Merger for cash and other
property (including, without limitation, cash paid to dissenting Target
shareholders and cash paid to Target shareholders in lieu of fractional shares
of Parent stock) will be treated as Target stock outstanding on the date of the
Merger but not exchanged for voting stock of Parent. As used herein, "Control"
of a corporation shall consist of ownership of stock possessing at least eighty
percent (80%) of the total combined voting power of all classes of stock
entitled to vote and at least eighty percent (80%) of the total number of shares
of all other classes of stock of the corporation. For purposes of determining
Control, a person shall not be considered to own voting stock if rights to vote
such stock (or to restrict or otherwise control the voting of such stock) are
held by a third party (including a voting trust) other than an agent of such
person;
6. At the time of the Merger, there will exist no rights to acquire
Target stock or to vote (or restrict or otherwise control the vote of) Target
stock which, if exercised, could affect Parent's acquisition and retention of
Control of Target;
7. The liabilities of Target have been incurred by Target in the
ordinary course of its business;
Napa National Bancorp
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 3
8. Target does not and will not at the Effective Time have any
liability (i) to any Target shareholder incurred in exchange for cash or other
assets transferred to Target, or (ii) to Parent or Merger Sub;
9. No Target shareholder has guaranteed any Target indebtedness that
is currently outstanding or will be outstanding at the Effective Time of the
Merger;
10. The fair market value of Target's assets will, at the Effective
Time, exceed the aggregate liabilities of Target;
11. Other than shares of Target stock or options to acquire Target
stock issued as compensation to present or former service providers (including,
without limitation, employees and directors) of Target in the ordinary course of
business, no issuances of Target stock or rights to acquire Target stock have
occurred or will occur during the Pre-Merger Period other than pursuant to
options, warrants or agreements outstanding prior to the Pre-Merger Period or as
otherwise specifically identified in the Agreement;
12. Cash or other property paid to employees of Target during the Pre-
Merger Period has been or will be in the ordinary course of business or pursuant
to agreements entered into prior to the Pre-Merger Period;
13. Target is not and will not be at the Effective Time an "investment
company" within the meaning of Section 368(a)(2)(F)(iii) and (iv) of the
Internal Revenue Code of 1986, as amended (the "Code");
14. Target 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;
15. Target (i) has not redeemed and will not redeem any of its stock
prior to and in connection with the Merger, and (ii) has not made and will not
make any extraordinary distributions (within the meaning of Section 1.368-
1T(e)(1) of the Treasury Regulations) with respect to its stock prior to and in
connection with the Merger. For the purposes of this representation,
extraordinary distributions will not include periodic dividends that are
consistent with Target's historic dividend practices;
16. No person related to Target (within the meaning of Section 1.368-
1T(e)(2) of the Treasury Regulations) has acquired or will acquire any stock of
Target prior to and in connection with the Merger;
17. Except with respect to payments of cash to dissenting Target
shareholders and to Target shareholders in lieu of fractional shares of Parent
stock, one hundred percent (100%) of the Target stock outstanding immediately
prior to the Merger will be exchanged solely for Parent voting stock. Thus,
except as set forth in the preceding sentence, Target intends that
Napa National Bancorp
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 4
no consideration be paid or received (directly or indirectly, actually or
constructively) for Target stock other than Parent voting stock;
18. At the Effective Time, the fair market value of the Parent stock
received by each Target shareholder will be approximately equal to the fair
market value of the Target stock surrendered in exchange therefor, and the
aggregate consideration received by Target shareholders in exchange for their
Target stock will be approximately equal to the fair market value of all of the
outstanding shares of Target stock immediately prior to the Merger;
19. Except as otherwise specifically provided in the Agreement,
Parent, Merger Sub, Target and the shareholders of Target will each pay
separately its or their own expenses in connection with the Merger;
20. The terms of the Agreement and all other agreements entered into
in connection therewith are the product of arm's-length negotiations;
21. None of the payments received by any shareholder-employees of
Target that are designated as compensation are actually separate consideration
for, or allocable to, any of their shares of Target stock; none of the shares of
Parent stock received by any shareholder-employees of Target in exchange for
shares of Target stock are actually separate consideration for, or allocable to,
any employment agreement or any covenants not to compete; and the compensation
paid to any shareholder-employees of Target will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services;
22. No direct or indirect subsidiary of Target owns any shares of
Target stock; 23. Target will continue its historic business through the
Effective Time of the Merger;
24. There is no intercorporate indebtedness existing between Parent
and Target or between Merger Sub and Target;
25. The payment of cash in lieu of fractional shares of Parent stock
in connection with the consummation of the Merger is solely for the purpose of
avoiding the expense and inconvenience to Parent of issuing fractional shares
and does not represent separately bargained-for consideration. The total cash
consideration that will be paid in the Merger to Target shareholders instead of
issuing fractional shares of Parent stock will not exceed one percent (1%) of
the total consideration that will be issued in the transaction to Target
shareholders in exchange for their stock. The fractional share interests of each
shareholder will be aggregated and no Target shareholder will receive cash in an
amount equal to or greater than the value of one full share of Parent stock;
Napa National Bancorp
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 5
26. Each of the representations made by Target in the Agreement and
any other documents associated therewith is true and accurate; and
27. The undersigned officer is authorized to make all of the
certifications and representations on behalf of Target set forth herein.
B. Reliance by You in Rendering Opinion;
Limitations on your Opinion
1. The undersigned recognizes that (i) your opinion will be based on
the representations set forth herein and on the statements contained in the
Agreement and documents related thereto and (ii) your opinion will be subject to
certain limitations and qualifications including that it may not be relied upon
if any such representations are not accurate in all material respects.
2. Notwithstanding anything herein to the contrary, the undersigned
makes no representations regarding any actions or conduct of Target pursuant to
Parent's exercise of control over Target after the Merger.
3. The undersigned recognizes that your opinion will not address any
tax consequences of the Merger or any action taken in connection therewith
except as expressly set forth in such opinion.
Very truly yours,
Napa National Bancorp
By /s/ Xxxxx X. Xxxxx
____________________________________
Its President & Chief Operating Officer
___________________________________
XXXXX FARGO & COMPANY
February 9, 2000
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
Xxxxx Street Tower
Xxx Xxxxxx
Xxx Xxxxxxxxx, XX 94105
Re: Merger pursuant to the Agreement and Plan of Reorganization (the
"Agreement") dated as of November 18, 1999, and amended as of January
18, 2000, among Xxxxx Fargo & Company, a Delaware corporation
("Parent"), and Napa National Bancorp, a California corporation
("Target")
Ladies and Gentlemen:
This letter is supplied to you in connection with your rendering of an
opinion pursuant to the Agreement regarding certain federal income tax
consequences of the above-captioned merger (the "Merger"). Unless otherwise
indicated, capitalized terms not defined herein have the meanings set forth in
the Agreement.
A. Representations
After consulting with his counsel and auditors regarding the meaning
of and factual support for the following representations, the undersigned hereby
certifies and represents that the following facts are now true and will continue
to be true through the Effective Time of the Merger:
1. Pursuant to the Merger, Xxxxx Fargo NNB Merger Co., a wholly owned
subsidiary of Parent ("Merger Sub") will merge with and into Target, and Target
will acquire all of the assets and liabilities of Merger Sub. At least ninety
percent (90%) of the fair market value of the net assets and at least seventy
percent (70%) of the fair market value of the gross assets held by Target
immediately prior to the Merger and at least ninety percent (90%) of the fair
market value of the net assets and at least seventy (70%) of the fair market
value of the gross assets held by Merger Sub immediately prior to the Merger
will be held by Target after the Merger (referred to as the "substantially all
requirement"). For the purpose of determining the percentage of Target's and
Merger Sub's net and gross assets held by Target immediately following the
Merger, the following assets will be treated as property held by Target or
Merger Sub, as the case may be, immediately prior to the Merger but not by
Target subsequent to the Merger: (i) assets disposed of by Target or Merger Sub
(other than assets transferred by Merger Sub to Target in the Merger) prior to
or subsequent to the Merger and in contemplation thereof (including without
limitation any asset disposed of by Target or Merger Sub, other than in the
ordinary course of business, pursuant to a plan or intent existing during the
period ending at the
Xxxxx Fargo & Company
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 2
Effective Time and beginning with the commencement of negotiations (whether
formal or informal) with Target regarding the Merger (the "Pre-Merger Period")),
(ii) assets used by Target or Merger Sub to pay reorganization expenses or
liabilities incurred in connection with the Merger, (iii) assets used by Target
or Merger Sub to make payments to dissenting Target shareholders and to Target
shareholders in lieu of fractional shares of Parent stock and (iv) assets used
by Target or Merger Sub to make distribution, redemption or other payments in
respect of Target stock or rights to acquire such stock (including payments
treated as such for tax purposes) that are made in contemplation of the Merger
or related thereto;
2. Parent's acquisition of Target is being undertaken for business
reasons;
3. Prior to the Merger, Parent will be in "Control" of Merger Sub. As
used herein, "Control" of a corporation shall consist of ownership of stock
possessing at least eighty percent (80%) of the total combined voting power of
all classes of stock entitled to vote and at least eighty percent (80%) of the
total number of shares of all other classes of stock of the corporation. For
purposes of determining Control, a person shall not be considered to own voting
stock if rights to vote such stock (or to restrict or otherwise control the
voting of such stock) are held by a third party (including a voting trust) other
than an agent of such person;
4. Merger Sub has been formed solely to consummate the Merger and,
prior to the Effective Time, Merger Sub has not conducted and will not conduct
any business activity or other operation of any kind (except for the issuance of
its stock to Parent);
5. In the Merger, all shares of Target stock will be exchanged solely
for voting stock of Parent, except to the extent of cash paid to dissenting
Target shareholders and cash paid in lieu of fractional shares in accordance
with the terms of the Agreement, and the shares of Target stock that are
exchanged solely for Parent voting stock will represent Control of Target;
6. Parent has no plan or intention to cause Target to issue
additional shares of stock after the Merger or take any other action that would
result in Parent losing control of Target within the meaning of Section 368(c)
of the Internal Revenue Code of 1986, as amended (the "Code");
7. Except for transfers permitted under Section 368(a)(2)(C) of the
Code or Treasury Regulation Section 1.368-2(k), Parent has no current plan or
intention to (i) liquidate Target; (ii) merge Target with or into another
corporation other than into Parent in a transaction qualifying as a
reorganization under Section 368(a)(1)(A) of the Code; (iii) sell, distribute or
otherwise dispose of Target stock; or (iv) sell or otherwise dispose of (if
Target is merged into Parent), or cause Target to sell or otherwise dispose of,
any of Target's assets (or any assets acquired from Merger Sub) except for
dispositions made in the ordinary course of business, payment of expenses
incurred by Target pursuant to the Merger (including payments made to
Xxxxx Fargo & Company
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 3
dissenting Target shareholders and payments with respect to fractional shares)
or transfers or dispositions that do not violate the substantially all
requirement as described in Paragraph 1 above;
8. In the Merger, Merger Sub will have no liabilities assumed by
Target and will not transfer to Target any assets subject to liabilities;
9. Parent intends that Target (or Parent if Target is merged into
Parent) will continue the historic business of Target or use a significant
portion of Target's historic assets in a business following the Merger;
10. Neither Parent nor any current or former subsidiary of Parent
owns, or has owned during the past five (5) years, directly or indirectly, 5% or
more of the shares of Target stock, or the right to acquire or vote 5% or more
of such shares (except such rights as are granted in the Agreement);
11. Neither Parent nor Merger Sub is an investment company within the
meaning of Sections 368(a)(2)(F)(iii) and (iv) of the Code;
12. Neither Parent nor Merger Sub 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. Neither Parent (or any agent of Parent) nor any "related person"
with respect to Parent within the meaning of Section 1.368-1(e)(3) of the
Treasury Regulations (a) has purchased or will purchase 5% or more of Target's
stock in connection with or in contemplation of the Merger, or (b) has purchased
or will purchase any Parent stock issued in the Merger except for any purchases
of Parent stock pursuant to the stock repurchase program described in the next
paragraph;
14. Parent has no plan or intention to reacquire any of its stock
issued in the transaction. However, Parent has an ongoing stock repurchase
program for Parent common stock. The Parent repurchase program was created by
action of the Parent Board of Directors and publicly announced on September 30,
1999. The program authorizes the repurchase of up to 82 million shares of Parent
common stock. As of June 30, 1999, Parent had approximately 1.65 billion shares
of common stock outstanding. The program is designed to help Parent meet common
stock issuance requirements for Parent's employee benefit plans and conversion
of convertible securities, and other company purposes, including acquisitions
accounted for as purchases and for managing the company capital position.
(a) Parent intends that all stock repurchases made pursuant to this
stock repurchase program, or any other future stock repurchase program
adopted by Parent, (i) shall be undertaken for a corporate business
purchase, (ii) shall be made in the open market for stock of Parent which
is widely held and publicly traded, except that
Xxxxx Fargo & Company
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 4
Parent may acquire stock in privately negotiated trades made directly with
an entity that is not known to Parent to have acquired such stock in the
Merger, and any redemptions or repurchases of stock issued in the Merger
that occur shall be incidental to the operation of such stock repurchase
plan, and (iii) shall be limited to, in the aggregate, a small percentage
of Parent common stock outstanding at the time of the redemption or
repurchase;
(b) Any repurchases by Parent of Parent common stock on the open
market at the same time that a former Target shareholder may be selling
such stock on the open market would be purely coincidental;
(c) Parent's program to repurchase Parent common stock subsequent
to the Merger will not be undertaken at the request of Target or Target
shareholders, and actual repurchases by Parent of Parent common stock
following the Merger will not be made at the request of Target or Target
shareholders;
15. The payment of cash in lieu of fractional shares of Parent stock
is solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained-for
consideration;
16. With the possible exception of Target shareholders who hold their
shares under different names or in separate accounts or otherwise submit
multiple letters of transmittal, the total cash received by a Target shareholder
in lieu of fractional share interests of Parent will not exceed the Average
Closing Price of one full share of Parent common stock;
17. At the Effective Time of the Merger, the fair market value of the
Parent stock (plus cash in lieu of fractional shares) received by each Target
shareholder will be approximately equal to the fair market value of the Target
stock surrendered in exchange therefor, and the aggregate consideration received
by Target shareholders in exchange for their Target stock will be approximately
equal to the fair market value of all of the outstanding shares of Target stock
immediately prior to the Merger;
18. No shares of Merger Sub have been or will be used as
consideration or issued to shareholders of Target pursuant to the Merger;
19. Except as otherwise specifically provided in the Agreement,
Parent, Merger Sub, Target and the shareholders of Target will each pay
separately its or their own expenses in connection with the Merger;
20. There is no intercorporate indebtedness existing between Parent
and Target or between Merger Sub and Target that was issued, acquired or will be
settled at a discount;
Xxxxx Fargo & Company
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 5
21. Parent will assume no liabilities of Target or any Target
shareholder in connection with the Merger;
22. The terms of the Agreement and all other agreements entered into
in connection therewith are the product of arm's-length negotiations;
23. None of the payments received by any shareholder-employees of
Target that are designated as compensation are actually separate consideration
for, or allocable to, any of their shares of Target stock; none of the shares of
Parent stock received by any shareholder-employees of Target in exchange for
shares of Target stock are actually separate consideration for, or allocable to,
any employment agreement or any covenants not to compete; and the compensation
paid to any shareholder-employees of Target will be for services actually
rendered and will be commensurate with amounts paid to third parties bargaining
at arm's length for similar services;
24. With respect to each instance, if any, in which shares of Target
stock have been purchased by a shareholder of Parent (a "Shareholder") during
the Pre-Merger Period (a "Stock Purchase"): (i) the Stock Purchase was not made
by such Shareholder as a representative, or for the benefit, of Parent; (ii) the
purchase price paid by such Shareholder pursuant to the Stock Purchase was not
and will not be advanced, and was not and will not be reimbursed, either
directly or indirectly, by Parent; (iii) at no time was such Shareholder or any
other party required or obligated to surrender to Parent the Target stock
acquired in the Stock Purchase, and neither such Shareholder nor any other party
will be required to surrender to Parent the Parent stock for which such shares
of Target stock will be exchanged in the Merger; and (iv) the Stock Purchase was
not a formal or informal condition to consummation of the Merger;
25. Each of the representations made by Parent and Merger Sub in the
Agreement and any other documents associated therewith is true and accurate in
all material respects; and
26. The undersigned officer of Parent is authorized to make all of
the certifications and representations on behalf of Parent set forth herein.
B. RELIANCE BY YOU IN RENDERING OPINION;
LIMITATIONS ON YOUR OPINION
1. The undersigned recognizes that (i) your opinion will be based on
the representations set forth herein and on the statements contained in the
Agreement and the documents related thereto and (ii) your opinion will be
subject to certain limitations and qualifications including that it may not be
relied upon if any such representations are not accurate in all material
respects.
Xxxxx Fargo & Company
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP February 9, 2000
Page 6
2. The undersigned recognizes that your opinion will not address any
tax consequences of the Merger or any action taken in connection therewith
except as expressly set forth in such opinion.
Very truly yours,
Xxxxx Fargo & Company
By /s/ Xxxx X. Xxxxx
_______________________________________
Title Executive Vice President
____________________________________
