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EXHIBIT 8.2
[ERNST & YOUNG LLP LETTERHEAD]
March 21, 2000
Dr. Alexandre A. Balkanski
Chief Executive Officer
C-Cube Microsystems Inc.
1778 McCarthy Blvd.
Milpitas, CA 95035
Dear Dr. Balkanski:
You have requested our opinion as to certain U.S. federal income tax
consequences to the shareholders of C-Cube Microsystems Inc. ("C-Cube" or
"Distributing"), a Delaware corporation, (the "Shareholders") relating to the
proposed distribution (the "Distribution") of the stock of C-Cube Semiconductor
Inc. ("Semiconductor I" or "Controlled"), a Delaware corporation, by C-Cube, as
described in the Documents (defined below).
In rendering these opinions, Ernst & Young LLP ("E&Y") has relied upon the
following documents (together referred to as the "Documents") attached hereto:
1. The factual Statement of Facts and Representations, dated March __,
2000 provided by the managements of Distributing and of Controlled to
E&Y (the "Statement of Facts and Representations"), including the
factual descriptions therein of the transactions effected by the
Development and Requirements Agreement, dated as of April 20, 1993,
between C-Cube and DiviCom Inc., the Marketing Agreement dated as of
November 17, 1994, between C-Cube and DiviCom, Inc., and the Joint
Venture and Shareholders Agreement, dated as of April 20, 1993,
between Eurodec, SAGEM International S.A., Tregor Electronique,
C-Cube, Nolan Daines, and DiviCom Inc. (collectively, the "DiviCom
Agreements");
2. The Amended and Restated Agreement and Plan of Merger and
Reorganization By and Between C-Cube Microsystems, Inc., and Harmonic,
Inc., ("Harmonic") dated as of Dec. 9, 1999 (the "Harmonic Merger
Agreement");
3. The execution of the Master Separation and Distribution Agreement, the
Assignment and Assumption Agreement, the Transitional Services
Agreement, the Employee Matters Agreement, the Tax Sharing Agreement,
the Master Confidential Disclosure Agreement, the Indemnification and
Insurance Matters Agreement, and the Real Estate Matter Agreement
(collectively, the "Separation Agreements") between Distributing and
entities affiliated with Distributing, and Controlled and entities
affiliated with Controlled, in substantially the form of the drafts
current as of the date hereof.
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4. The Thomson Agreement between Controlled and Thomson Multimedia S.A.,
an entity formed under the laws of France, dated as of February 10,
2000 (together with the Harmonic Merger Agreement and the Separation
Agreements, the "Agreements").
You have advised us that the Documents provide a complete and accurate
description of all relevant facts and circumstances surrounding the
Distribution. E&Y has made no independent verification of any of the facts and
representations set forth in the Documents and, therefore, has relied upon the
completeness, truth and accuracy of the Documents for purposes of rendering this
opinion. While E&Y has had discussions with management personnel of Distributing
and Controlled and their affiliates in connection with rendering this opinion,
(i) the substance of those discussions is in all material respects reflected in
the factual STATEMENT OF FACTS AND REPRESENTATIONS, (ii) the management
personnel of Distributing have imparted no information materially additional to
or inconsistent with that contained in the factual STATEMENT OF FACTS AND
REPRESENTATIONS, (iii) E&Y has assumed that any information imparted in such
discussions with management personnel is true, and has not made (and has at no
time had any means of making) any independent verification of any information
imparted in such discussions, and (iv) the issuance of this opinion shall not
imply anything to the contrary of (i)-(iii) preceding. For purposes of rendering
this opinion, E&Y has assumed that all representations or warranties (including
representations as to future conduct, e.g. that no inconsistent filing or return
position will be taken) qualified by "to the knowledge of," "belief" or "expect"
or similar qualifications are true without any such qualification. Any
inaccuracies in, omissions from, or modifications to the Documents may affect
the conclusions stated herein, perhaps in an adverse manner.
OPINION
Based on the Documents, the facts as summarized therein, and the applicable
law, and subject to the limitations and qualifications stated herein, it is our
opinion that for U.S. federal income tax purposes:
1. Except with respect to any cash received in lieu of any fractional
share, no gain or loss will be recognized to (and no amount will be
included in the income of) the Shareholders on the receipt of the
stock of Controlled in the Distribution (Section 355(a)).
2. The aggregate bases of the Distributing stock and of the Controlled
stock in the hands of each Shareholder after the Distribution
(including any fractional share interests to which such Shareholder is
entitled) will equal the aggregate basis of the Distributing stock
held by such Shareholder immediately before the Distribution,
allocated between the Distributing and Controlled stock in proportion
to the fair market value of each in accordance with Treas. Reg.
Section 1.358-2(a)(2) (Sections 358(a)(1), (b)(2), and (c)).
3. The holding period of the Controlled stock received by each
Shareholder will include the period during which such Shareholder has
held the Distributing shares on which the Distribution is made
(Section 1223(1)).
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4. Any payments of cash in lieu of fractional shares of Controlled stock
will be treated for federal income tax purposes as if the fractional
shares were issued in the Distribution and then were redeemed by
Controlled. The cash payments will be treated as having been received
as a distribution in full payment in exchange for the shares treated
as so redeemed, subject to the provisions of Section 302. If such cash
payments are treated as payments in exchange for such fractional
shares under Section 302, then, provided the fractional share
interests are capital assets in the hands of the recipient
shareholders, the gain or loss on such deemed exchanges will
constitute capital gain or loss subject to the provisions and
limitations of Subchapter P of Chapter 1 of the Code.
SCOPE OF OPINION
The scope of the opinion is expressly limited solely to the federal income tax
consequences set forth in the section above entitled "Opinion." No opinion has
been requested, no determination has been made, nor has any opinion been
expressed on any other issues including, but not limited to, any state, foreign,
consolidated return, employee benefit, or alternative minimum tax issues, or on
the Section 306 or Section 382 (or any other Code section) consequences to the
parties to this transaction. In addition, no opinion has been expressed
regarding (i) the valuation of any assets or stock of Distributing or
Controlled; (ii) the U.S. federal income tax consequences of the acquisition of
Distributing by Harmonic; (iii) the U.S. federal income tax consequences of the
"Internal Restructuring" (as defined in the Statement of Facts and
Representations) to occur prior to the Distribution; (iv) the U.S. federal
income tax consequences of the exchange or conversion of any options, warrants
or similar interests, (v) the tax treatment of shareholders who acquired their
shares in compensatory transactions, who do not hold their shares as capital
assets or who hold shares that are subject to constructive sale, straddle,
heading, conversions or similar transactions, (vi) the federal income tax
consequences of the Distribution or of the Harmonic Merger to Distributing or to
Controlled or to Harmonic, or (vii) the federal income tax consequences of any
other transactions or events that may take place subsequent to the Distribution.
Our opinion relates solely to the tax consequences of the Distribution to the
Shareholders under the federal income tax laws of the United States, and we
express no opinion (and no opinion should be inferred) regarding the
consequences of the Distribution to any other person or entity (including
without limitation C-Cube, Harmonic, or Controlled) under the laws of any
jurisdiction.
No opinion is expressed as to any transaction other than the Distribution as
described in the Documents or as to any transaction whatsoever, including the
Distribution, (i) if all of the transactions described in the Agreements are not
consummated in accordance with the terms of the Agreements and without waiver or
breach of any material provision thereof, (ii) if all the representations,
warranties, statements and assumptions in the Documents upon which we rely are
not true and accurate in all material respects at all relevant times, or (iii)
if material transactions occur after the Distribution that are not described in
the Documents. In addition, the above opinion is based on the information
contained in the factual Statement of Facts and Representations, and assumes
that the facts and representations contained therein could, in fact, be
established in a court of law in accordance with the appropriate governing laws
and burdens of proof. In the event any one of the statements, representations,
warranties or assumptions upon which we rely to issue this opinion is
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incorrect, our opinion might be adversely affected and may not be relied upon.
If any of the certifications and representations contained in Statement of Facts
and Representations ceases to be true at any time prior to the Distribution,
Controlled or C-Cube as the case may be, shall deliver to E&Y a written
statement to that effect.
The opinions and conclusions contained herein, as stated above, are based upon
an analysis of the Internal Revenue Code as in effect on the date hereof,
Treasury Regulations, current case law, and published IRS authorities. The
foregoing, including future interpretations thereof, are subject to change, and
such change may be retroactively effective. If so, the opinions and conclusions,
as set forth above, may be affected and may not be relied upon. In addition, the
above opinions are based on the information contained in the Documents. Any
variation or differences in the Documents may affect the opinions and
conclusions contained herein, perhaps in an adverse manner. E&Y has undertaken
no obligation to update these opinions for changes in facts or law occurring
subsequent to the date hereof. The opinions merely represent our interpretation
of existing federal income tax law, and are not binding on the IRS or any court
of law. You should also be aware that as to certain of our assessments contained
therein, there are currently no rulings or cases on point. No assurance can be
given that the IRS would not adopt a position contrary to our opinion and
prevail in a court of law.
This opinion is being delivered to you solely for the benefit of Shareholders.
We hereby consent to the use of our name and the reference to this opinion (and
its use as an exhibit) in the Form S-1 and S-4 to be filed with the Securities
and Exchange Commission.
Respectfully submitted,
/s/ ERNST & YOUNG LLP
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Ernst & Young LLP