Exhibit 8.2
August 18, 1999
Xxxxxxx Chemical Company, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
This opinion is being delivered to you pursuant to the Agreement and Plan
of Reorganization (the "Agreement"), dated as of July 14, 1999, among
Catalytica, Inc., a Delaware corporation ("Catalytica"), Pilot Acquisition
Corporation, a Michigan corporation and a direct, wholly-owned subsidiary of
Catalytica ("Merger Sub"), and Xxxxxxx Chemical Company, Inc., a Michigan
corporation ("Xxxxxxx"). Pursuant to the Agreement, Merger Sub will merge with
and into Xxxxxxx (the "Merger"), and Xxxxxxx will become a wholly-owned
subsidiary of Catalytica. Except as otherwise provided, capitalized terms used
but not defined herein shall 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 counsel to Xxxxxxx 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 Agreement and the following
assumptions:
1. Pursuant to the Merger, Merger Sub will merge with and into Xxxxxxx,
and Xxxxxxx will acquire all of the assets and liabilities of Merger Sub and
retain all of its assets and liabilities. Specifically, the assets transferred
to Xxxxxxx pursuant to the Merger will represent 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 Xxxxxx Sub immediately prior
to the Merger. In addition, 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 Xxxxxxx immediately prior to the Merger will
continue to be held by Xxxxxxx immediately after the Merger. For the purpose of
determining the percentage of Xxxxxxx'x and Merger Sub's net and gross assets
held by Xxxxxxx or Merger Sub, as the case may be, immediately following the
Merger, the following assets will be treated as property held by Xxxxxxx
immediately prior but not subsequent to the Merger: (a) assets disposed of by
Xxxxxxx or Merger Sub (other than assets transferred from Merger Sub to Xxxxxxx
in the Merger) prior to or subsequent to the Merger and in contemplation thereof
(including without limitation any asset disposed of by Xxxxxxx, other than in
the ordinary course of business, pursuant to a plan or intent existing during
the period ending at the Effective Time of the Merger and
Xxxxxxx Chemical Company, Inc.
August 18, 1999
Page 2
------------------------------
beginning with the commencement of negotiations (whether formal or informal)
with Catalytica regarding the Merger (the "Pre-Merger Period")), (b) assets used
by Xxxxxxx or Merger Sub to pay shareholders perfecting dissenters' rights or
other expenses or liabilities incurred in connection with the Merger and (c)
assets used to make distribution, redemption or other payments in respect of
stock of Xxxxxxx or rights to acquire such stock (including payments treated as
such for tax purposes) that are made in contemplation of the Merger or that are
related thereto;
2. Other than in the ordinary course of business or pursuant to its
obligations under the Agreement, Xxxxxxx 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;
3. Xxxxxxx'x and Catalytica's principal reasons for participating in the
Merger are bona fide business purposes unrelated to taxes;
4. At the Effective Time of the Merger, Xxxxxxx will have no outstanding
equity interests other than those disclosed in Section 2.3 of the Agreement. At
the Effective Time of the Merger, except as specified in the Agreement, Xxxxxxx
will have no outstanding warrants, options, or convertible securities or any
other type of right outstanding pursuant to which any person could acquire
shares of Wyckoff capital stock or any other equity interest in Xxxxxxx that, if
exercised, could affect Catalytica's acquisition or retention of "Control" of
Wyckoff. Prior to the Merger, Catalytica will be in "Control" of Merger Sub.
As used in this letter, "Control" shall consist of direct ownership of shares 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
shares of voting stock if rights to vote such shares (or to restrict or
otherwise control the voting of such shares) are held by a third party
(including a voting trust) other than an agent of such person;
5. In the Merger, shares of stock of Xxxxxxx representing "Control" of
Xxxxxxx will be exchanged solely for shares of Catalytica Common Stock, which
is voting stock. At the Effective Time of the Merger, there will exist no
rights to acquire Xxxxxxx capital stock or to vote (or restrict or otherwise
control the vote of) shares of stock of Xxxxxxx which, if exercised, would
affect Catalytica's acquisition and retention of Control of Xxxxxxx. For
purposes of this paragraph, shares of the stock of Xxxxxxx exchanged in the
Merger for cash and other property (including, without limitation, cash paid
to shareholders of Xxxxxxx perfecting dissenters' rights, if any, or in lieu
of fractional shares of Catalytica Common Stock) will be treated as shares of
stock of Xxxxxxx outstanding on the date of the Merger but not exchanged for
shares of Catalytica Common Stock;
Xxxxxxx Chemical Company, Inc.
August 18, 1999
Page 3
------------------------------
6. The total fair market value of all consideration other than shares of
Catalytica Common Stock received by shareholders of Xxxxxxx in the Merger
(including, without limitation, cash paid to Xxxxxxx shareholders perfecting
dissenters' rights or in lieu of fractional shares of Catalytica Common Stock)
will be less than ten percent (10%) of the aggregate fair market value of shares
of stock of Xxxxxxx outstanding immediately prior to the Merger;
7. Merger Sub was formed solely for the purpose of effecting the Merger
and has conducted no business or other activities except in connection with the
Merger;
8. Catalytica has no plan or intention to cause Xxxxxxx to issue
additional shares of stock after the Merger, or take any other action, that
would result in Catalytica losing Control of Xxxxxxx;
9. Catalytica has no plan or intention to reacquire any of its stock
issued pursuant to the Merger other than potentially the shares held in escrow
or stock acquired from terminated employees;
10. Except for transfers described in both Section 368(a)(2)(C) of the
Code and Treasury Regulation Section 1.368-2(k)(2), Catalytica has no plan or
intention to (a) liquidate Xxxxxxx; (b) merge Xxxxxxx with or into another
corporation including Catalytica or its affiliates; or (c) sell, distribute or
otherwise dispose of stock of Xxxxxxx, or cause Xxxxxxx to sell or otherwise
dispose of any of its assets or of any assets acquired from Merger Sub except
for dispositions made in the ordinary course of business or to pay expenses
incurred by Xxxxxxx pursuant to the Merger;
11. In the Merger, Merger Sub will have no liabilities assumed by Xxxxxxx
and will not transfer to Xxxxxxx any assets subject to liabilities, except to
the extent incurred in connection with the transactions contemplated by the
Agreement;
12. Catalytica will cause Xxxxxxx either to continue its historic
business or use a significant portion of its historic business assets in a
business. For purposes of this assumption, Catalytica will be deemed to satisfy
this requirement if (a) the members of Catalytica's qualified group (as defined
in Treas. Reg. Section 1.368-1(d)(4)(ii)), in the aggregate, continue the
historic business of Xxxxxxx or use a significant portion of Xxxxxxx'x historic
business assets in a business, or (b) the foregoing activities are undertaken by
a partnership in which (i) the members of Catalytica's qualified group, in the
aggregate, own at least a thirty-three and one-third percent (33 1/3%) interest,
or (ii) a member of the qualified group has active and substantial management
functions as a partner with respect to the partnership business and the members
of the qualified group, in the aggregate, own at least a twenty percent (20%)
interest;
13. The liabilities of Xxxxxxx have been incurred by Xxxxxxx in the
ordinary course of its business;
Xxxxxxx Chemical Company, Inc.
August 18, 1999
Page 4
------------------------------
14. The fair market value of Xxxxxxx'x assets will, on the Effective Time
of the Merger, exceed the aggregate liabilities of Xxxxxxx plus the amount of
liabilities, if any, to which such assets are subject;
15. Catalytica does not own, nor has it or any of its affiliates owned
during the past five (5) years, directly or indirectly, any shares of stock of
Xxxxxxx or rights to acquire such stock;
16. Following the Merger, Catalytica will comply with the record keeping
and information filing requirements of Treas. Reg. 1.368-3;
17. Neither Xxxxxxx, Catalytica nor Catalytica, is nor will be on the
Effective Time of the Merger, an "investment company" within the meaning of
Section 368(a)(2)(F)(iii) and (iv) of the Code;
18. Neither Xxxxxxx, Sub nor Catalytica is, nor will be on the Effective
Time of the Merger, 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;
19. Neither Catalytica nor Xxxxxxx, and persons related to Catalytica or
Xxxxxxx, within the meaning of Treas. Reg. Section 1.368-1(e)(3), have redeemed,
purchased or otherwise acquired ("Purchased") other than in exchange for
Catalytica Common Stock or Xxxxxxx Common Stock, an amount of Xxxxxxx Common
Stock, and Xxxxxxx has not made any extraordinary distributions with respect to
its common stock, prior to and in connection with the Merger, that would, in the
aggregate, reduce the value of all of the outstanding Xxxxxxx Common Stock
immediately prior to the Merger, after giving effect to such Purchases and
extraordinary distributions (the "Continuing Proprietary Interest"), to a value
of less than fifty percent (50%) of the value of all of the outstanding Xxxxxxx
Common Stock immediately prior to the Merger determined without regard to such
Purchases and extraordinary distributions. For purposes of this assumption,
Xxxxxxx Common Stock treated as part of the Continuing Proprietary Interest will
not include shares of Xxxxxxx Common Stock that will be (a) exchanged in the
Merger for consideration other than Catalytica Common Stock, including Xxxxxxx
Common Stock surrendered for cash or other property by dissenters, or (b) deemed
exchanged for a fractional share of Catalytica Common Stock which is redeemed by
Catalytica. In addition, for purposes of this assumption, extraordinary
distributions will not include periodic dividends that are consistent with
Xxxxxxx'x historic dividend practices, and repurchases in the ordinary course of
business of unvested shares by Xxxxxxx, if any, acquired from Xxxxxxx
terminating employees will be disregarded;
20. The payment of cash in lieu of fractional shares of Catalytica Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
Catalytica of issuing fractional shares of Catalytica Common Stock and does not
represent separately bargained-for consideration. The total cash consideration
that will be paid in the transaction to shareholders of Xxxxxxx instead of
Xxxxxxx Chemical Company, Inc.
August 18, 1999
Page 5
------------------------------
issuing fractional Catalytica Common Stock will not exceed one percent (1%) of
the total consideration that will be issued in the transaction to the
shareholders of Xxxxxxx in exchange for their shares of Xxxxxxx. The fractional
share interests of each shareholder of Xxxxxxx will be aggregated, and no
shareholder of Xxxxxxx will receive cash in an amount equal to or greater than
the value of one share of Catalytica Common Stock;
21. Except with respect to (a) payments of cash to shareholders of
Xxxxxxx in lieu of fractional shares of Catalytica Common Stock, and (b)
payments of cash, if any, to shareholders of Xxxxxxx perfecting dissenters'
rights, one hundred percent (100%) of the shares of stock of Xxxxxxx outstanding
immediately prior to the Merger will be exchanged solely for shares of
Catalytica Common Stock. Thus, except as set forth in the preceding sentence,
Xxxxxxx intends that no consideration be paid or received (directly or
indirectly, actually or constructively) for shares of stock of Xxxxxxx other
than shares of Catalytica Common Stock;
22. The fair market value of the shares of Catalytica Common Stock
received by each shareholder of Xxxxxxx will be approximately equal to the fair
market value of the shares of stock of Xxxxxxx surrendered in exchange therefor
and the aggregate consideration received by shareholders of Xxxxxxx in exchange
for their shares of stock of Xxxxxxx will be approximately equal to the fair
market value of all of the outstanding shares of stock of Xxxxxxx immediately
prior to the Merger;
23. Each of Merger Sub, Catalytica and Xxxxxxx and each shareholder of
Xxxxxxx will each pay separately his, her or its own expenses relating to the
Merger;
24. There is no intercorporate indebtedness existing between Catalytica
and Xxxxxxx or between Merger Sub and Xxxxxxx that was issued, acquired, or will
be settled at a discount as a result of the Merger; Catalytica will assume no
liabilities of Xxxxxxx or any shareholder of Xxxxxxx in connection with the
Merger;
25. The terms of the Agreement and the other agreements relating thereto
are the product of arm's length negotiations;
26. None of the compensation received by any shareholder-employees of
Xxxxxxx will be separate consideration for, or allocable to, any of their shares
of stock of Xxxxxxx; none of the shares of Catalytica Common Stock received by
any shareholder-employees of Xxxxxxx will be separate consideration for, or
allocable to, any employment agreement or any covenants not to compete; and the
compensation paid to any shareholder-employees of Xxxxxxx will be for services
actually rendered and will be commensurate with amounts paid to third parties
bargaining at arm's length for similar services;
27. With respect to each instance, if any, in which shares of stock of
Xxxxxxx have been purchased by a stockholder of Catalytica (a "Stockholder")
during the Pre-Merger Period (a "Stock
Xxxxxxx Chemical Company, Inc.
August 18, 1999
Page 6
------------------------------
Purchase"): (a) the Stock Purchase was made by such Stockholder on its own
behalf, rather than as a representative, or for the benefit, of Catalytica, (b)
the Stock Purchase was entered into solely to satisfy the separate interests of
such Stockholder and the seller, and (c) the purchase price paid by such
Stockholder pursuant to the Stock Purchase was the product of arm's length
negotiations; and (iv) the Stock Purchase was not a formal or informal condition
to consummation of the Merger.
In connection with rendering this opinion, we have assumed (without any
independent investigation or review thereof) that:
1. Original documents submitted to us (including signatures thereto) are
authentic, documents submitted to us as copies conform to the original
documents, and that all such documents have been (or will be by the Effective
Time) duly and validly executed and delivered where due execution and delivery
are a prerequisite to the effectiveness thereof;
2. All representations, warranties and statements made or agreed to by
Catalytica, Xxxxxx Sub and Xxxxxxx, their management, employees, officers,
directors and shareholders in connection with the Merger, including, but not
limited to, those set forth in the Agreement (including the exhibits thereto)
are true and accurate at all relevant times;
3. All covenants contained in the Agreement (including exhibits thereto)
are performed without waiver or breach of any material provision thereof;
4. The Merger will be reported by Catalytica and Xxxxxxx on their
respective federal income tax returns in a manner consistent with the opinion
set forth below; and
5. Any representation or statement made "to the best of knowledge" or
similarly qualified is correct without such qualification.
Based on our examination of the foregoing items and subject to the
limitations, qualifications, assumptions and caveats set forth herein, we are of
the opinion that, if the Merger is consummated in accordance with the Agreement
(and without any waiver, breach or amendment of any of the provisions thereof),
then for federal income tax purposes, the Merger will be a reorganization within
the meaning of Section 368(a) of the Code.
This opinion does not address the various state, local or foreign tax
consequences that may result from the Merger or the other transactions
contemplated by the Agreement. In addition, no opinion is expressed as to any
federal income tax consequence of the Merger or the other transactions
contemplated by the Agreement except as specifically set forth herein, and this
opinion may not be relied upon except with respect to the consequences
specifically discussed herein.
Xxxxxxx Chemical Company, Inc.
August 18, 1999
Page 7
------------------------------
No opinion is expressed as to any transaction other than the Merger as
described in the Agreement, or as to any other transaction whatsoever, including
the Merger, if all of the transactions described in the Agreement are not
consummated in accordance with the terms of the Agreement and without waiver of
any material provision thereof. To the extent that any of the representations,
warranties, statements and assumptions material to our opinion and upon which we
have relied are not accurate and complete in all material respects at all
relevant times, our opinion would be adversely affected and should not be relied
upon.
This opinion only represents our best judgment as to the federal income tax
consequences of the Merger and is not binding on the Internal Revenue Service or
any court of law, tribunal, administrative agency or other governmental body.
The conclusions are based on the Code, existing judicial decisions,
administrative regulations and published rulings. No assurance can be given that
future legislative, judicial or administrative changes or interpretations would
not adversely affect the accuracy of the conclusions stated herein.
Nevertheless, by rendering this opinion, 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 rendered for the purposes of Item 21 of Form S-4 and Item
601 of Regulation S-K, may be relied upon only by you and the Commission and may
not be used, quoted or referred to or filed for any other purpose without our
prior written permission.
Very truly yours,
XXXXXX XXXXXXXX & XXXX LLP
By____________________________________
Xxxxxxx X. Xxxxxxxxxx, a Partner
