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EXHIBIT 99.4
[MEDUSA LETTERHEAD]
, 1998
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 0000
Xxxxxxxxx & Xxxxxxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Re: March 17, 1998 Agreement and Plan of Merger ("Merger Agreement")
among Southdown, Inc. ("Southdown"), Bedrock Merger Corp.
("Bedrock") and Medusa Corporation ("Medusa").
Gentlemen:
We furnish this letter to you in connection with your opinion as to
certain federal income tax consequences of the proposed merger contemplated by
the Merger Agreement. Capitalized terms not otherwise defined have meanings
assigned to them in the Joint Proxy Statement/Prospectus dated , 1998
of Southdown and Medusa. The Merger is described in detail in the
Agreement.
To enable you to render your opinion, we make the following
representations:
1. At the time of the Merger, the fair market value of the
Southdown Common Stock and other consideration received by
each Medusa shareholder will be approximately equal to the
fair market value of the Medusa Shares surrendered in the
exchange.
2. Prior to and in connection with the Merger, Medusa has not
redeemed, nor have any of its affiliates purchased, Medusa
Shares.
3. Prior to and in connection with the Merger, Medusa has not
issued any extraordinary distributions to any of its
shareholders.
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4. Immediately following the Merger, Medusa 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 all
of Bedrock's net assets and all of Bedrock's gross assets held
immediately prior to the Merger. For purposes of this
representation, amounts paid to Medusa shareholders who receive
cash or other property, amounts used by Medusa to pay
reorganization expenses, and all redemptions and distributions
(except for regular, normal dividends) made by Medusa will be
included as assets of Medusa or Bedrock, respectively,
immediately prior to the Merger.
5. To the best knowledge of the management of Medusa, Medusa
has no plan or intention to dispose of any of its assets
after the Merger.
6. Medusa has no plan or intention to issue additional shares of
its stock that would result in Southdown owning less than 80
percent of the total combined voting power and 80 percent of
the total number of shares of each other Medusa stock class.
7. Medusa will not assume any of Bedrock's material liabilities
nor will it receive any of Bedrock's assets subject to
material liabilities, in the Merger.
8. To the best knowledge of the management of Medusa, following
the transaction, Medusa will continue its historic business and
use a significant portion of its historic business assets.
9. Other than as provided in the Merger Agreement, Medusa and its
shareholders will pay their respective expenses incurred in
connection with the Merger.
10. There is no intercorporate indebtedness existing between
Southdown and Medusa or between Bedrock and Medusa that was
issued, acquired, or will be settled at a discount.
11. At the time of the Merger, except for the Stock Option
Agreements, Medusa will not have outstanding any warrants,
options, convertible securities, or any other type of right
pursuant to which any person could acquire stock of Medusa
that, if exercised or converted, would affect Southdown's
acquisition or retention of at least 80 percent of the total
combined voting power and at least 80 percent of the total
number of shares of each other Medusa stock class.
12. Medusa is not a regulated investment company, a real estate
investment trust, or a corporation fifty percent or more of
the value of whose total assets are stock and securities, and
eighty percent or more of the value of whose total assets are
assets held for investment. In making the percentage
determinations under the preceding sentence, stock and
securities in any subsidiary corporation are disregarded and
the parent corporation is deemed to own its ratable share of
the subsidiary's assets, and a corporation is considered a
subsidiary if the parent owns fifty percent or more of the
combined voting power of all classes of stock entitled to vote
or fifty percent or more of the total value of shares of all
classes of stock outstanding.
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(Ex. 99.4)
13. On the date of the Merger, the fair market value of the Medusa
assets will exceed the sum of its liabilities, plus the amount
of liabilities, if any, to which the assets are subject.
14. Medusa is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership,
foreclosure, or similar proceeding in a federal or state
court.
15. The statutory and nonstatutory stock options currently
outstanding under Medusa's Stock Option Plan are not actively
traded on an established securities market and are not
transferable except by will or by the laws of descent or
distribution.
16. The Merger is being undertaken for bona fide business purposes.
Unless written notification to the contrary is received by you from
Medusa prior to the Merger, these representations will continue to be true and
correct at all times from today through the day of the Merger.
Very truly yours,
Medusa Corporation
By:
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Title:
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