Exhibit 8.1
[XXXXXX & AUSTIN LETTERHEAD]
November 26, 1997
True North Communications Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
Ladies and Gentlemen:
We refer to the Agreement and Plan of Merger dated as of July 30, 1997 (the
"Agreement") among True North Communications Inc., a Delaware Corporation
("Parent"), Cherokee Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Sub"), and Bozell, Jacobs, Xxxxxx &
Xxxxxxxx, Inc., a Delaware corporation (the "Company"), which provides for the
merger (the "Merger") of Sub with and into the Company on the terms and
conditions therein set forth, the time at which the Merger becomes effective
being hereinafter referred to as the "Effective Time." Capitalized terms used
but not defined herein have the meanings specified in the Agreement.
As provided in the Agreement, at the Effective Time, by reason of the
Merger: (i) all outstanding shares of Company Common Stock then held in the
treasury of the Company and any shares of Company Common Stock owned by Parent
or by any wholly owned subsidiary of Parent will be canceled, and no capital
stock of Parent, cash or other consideration will be delivered in exchange
therefor; (ii) each then issued and outstanding share of capital stock, par
value $0.01 per share, of Sub will be converted into one validly issued, fully
paid and nonassessable share of Common Stock, no par value per share, of the
Company, as the Surviving Corporation; (iii) subject to the right of holders of
Company Common Stock to dissent from the Merger, each then outstanding share of
Company Common Stock will be converted into 0.51 validly issued, fully paid and
nonassessable shares of Parent Common Stock; (iv) each then outstanding Warrant
will be converted into a specified number of validly issued, fully paid and
nonassessable shares of Parent Common Stock, as more fully set forth in the
Agreement; (v) and each then outstanding Company stock option or other right to
purchase shares of Company Common Stock (excluding the Warrants) will remain
outstanding after the Effective Time and shall be converted into and become the
right to purchase a number of shares of Parent Common Stock, as
more fully set forth in the Agreement. Cash will be paid in lieu of fractional
shares of Parent Common Stock.
The Merger and the Agreement are more fully described in Parent's
Registration Statement on Form S-4 (the "Registration Statement"), relating to
the registration of shares of Parent Common Stock, to which this opinion is an
exhibit, which is being filed by Parent with the Securities and Exchange
Commission pursuant to the Securities Act of l933, as amended. The Registration
Statement includes the Proxy Statement/Prospectus (the "Prospectus") of Parent
and the Company.
In rendering the opinions expressed below, we have relied upon the accuracy
of the facts, information and representations and the completeness of the
covenants contained in the Agreement, the Prospectus and such other documents as
we have deemed relevant and necessary. Such opinions are conditioned, among
other things, not only upon such accuracy and completeness as of the date
hereof, but also the continuing accuracy and completeness thereof as of the
Effective Time. Moreover, we have assumed the absence of any change to any of
such instruments between the date hereof and the Effective Time.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of all natural
persons and the conformity with original documents of all copies submitted to us
for our examination. We have further assumed that: (i) the transactions related
to the Merger or contemplated by the Agreement will be consummated (A) in
accordance with the Agreement and (B) as described in the Prospectus; (ii) the
Merger will qualify as a statutory merger under the laws of the State of
Delaware; and (iii) as of the date hereof, and as of the Effective Time (as if
made as of the Effective Time), the written statements made by executives of
Parent and the Company contained in the Parent Tax Certificate and the Company
Tax Certificate, respectively, and written statements made by certain
shareholders of the Company and Warrant holders, in each case will be accurate
in all respects.
In rendering the opinions expressed below, we have considered the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), Regulations promulgated thereunder by the United States Treasury
Department (the "Regulations"), pertinent judicial authorities, rulings of the
Internal Revenue Service and such other authorities as we have considered
relevant. It should be noted that the Code, the Regulations and such judicial
authorities, rulings and other authorities are subject to change at any time
and, in some circumstances, with retroactive effect; and any such change could
affect the opinions stated herein. Furthermore, the opinions expressed below
might not be applicable to Company stockholders who, for federal income tax
purposes, are nonresident alien individuals, foreign corporations, foreign
partnerships, foreign trusts or foreign estates, or who acquired their Company
Common Stock pursuant to the exercise of employee stock options or otherwise as
compensation.
Based upon and subject to the foregoing, it is our opinion, as counsel
for Parent, that for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the meaning
of Section 368(a) of the Code, and the Company, Sub and Parent will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code;
(ii) no gain or loss will be recognized by Parent or the Company as a
result of the Merger;
(iii) no gain or loss will be recognized by the stockholders of the
Company upon the conversion of their shares of Company Common Stock into
shares of Parent Common Stock pursuant to the Merger, except with respect
to cash, if any, received in lieu of fractional shares of Parent Common
Stock;
(iv) the aggregate tax basis of the shares of Parent Common Stock
received in exchange for shares of Company Common Stock pursuant to the
Merger (including a fractional share of Parent Common Stock for which cash
is paid) will be the same as the aggregate tax basis of such shares of
Company Common Stock;
(v) the holding period for shares of Parent Common Stock received in
exchange for shares of Company Common Stock pursuant to the Merger will
include the holder's holding period for such shares of Company Common
Stock, provided such shares of Company Common Stock were held as capital
assets by the holder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu of a
fractional share of Parent Common Stock will recognize gain or loss equal
to the difference, if any, between such stockholder's basis in the
fractional share (determined under clause (iv) above) and the amount of
cash received.
Notwithstanding the foregoing, no advice was requested regarding, and
the opinions described above do not address, the tax consequences of a
conversion in the Merger of Company Common Stock received upon the exercise of
Warrants prior to the Effective Time in contemplation of the Merger.
Except as expressly set forth in paragraphs (i) through (vi),
inclusive, you have not requested, and we do not herein express, any opinion
concerning the tax consequences of, or any other matters related to, the Merger.
We assume no obligation to update or supplement this letter to reflect
any facts or circumstances which might hereafter come to our attention with
respect to the opinions expressed above, including any changes in applicable law
or fact which may hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4 filed with the Securities and Exchange
Commission relating to the Merger.
Very truly yours,
/s/ Sidley & Austin
