EXHIBIT 8.1
BRUSSELS FOLEY & LARDNER ORLANDO
CHICAGO SACRAMENTO
DENVER FIRSTAR CENTER SAN DIEGO
DETROIT 777 EAST WISCONSIN AVENUE SAN FRANCISCO
JACKSONVILLE MILWAUKEE, WISCONSIN 53202-5367 TALLAHASSEE
LOS ANGELES TELEPHONE (414) 271-2400 TAMPA
MADISON FACSIMILE (414) 297-4900 WASHINGTON, D.C.
MILWAUKEE WEST PALM BEACH
April 2, 2001
Schultz Sav-O Stores, Inc. Fresh Brands, Inc.
2215 Union Avenue 2215 Union Avenue
Sheboygan, WI 53081 Sheboygan, WI 53081
Re: Federal Income Tax Consequences of Formation of
Holding Company Structure
Ladies and Gentlemen:
As counsel to Schultz Sav-O Stores, Inc. (the "Company") and Fresh
Brands, Inc. ("Fresh Brands"), we have been asked to advise you concerning the
anticipated federal income tax consequences of a Share Exchange and corporate
restructuring whereby the Company will become a wholly owned subsidiary of Fresh
Brands. The facts relating to the proposed transaction are described in the
Registration Statement of the Company dated this date and are generally
summarized below. All defined terms herein have the meaning ascribed to them in
the Registration Statement.
For business purposes, the Company and Fresh Brands have entered into
an Agreement and Plan of Share Exchange (the "Plan of Share Exchange"), pursuant
to which each share of Company common stock outstanding immediately prior to the
Effective Time of the Share Exchange will be exchanged for one share of Fresh
Brands common stock. There are no fractional shares of Company common stock.
Fresh Brands was organized by the Company solely for purposes of the Share
Exchange and has minimum capitalization and no significant assets and does not
engage in any business. At the Effective Time, all of the outstanding shares of
Fresh Brands common stock held by the Company prior to the Effective Time will
be cancelled. As a result of the foregoing, the Company will continue its
business as a wholly-owned subsidiary of Fresh Brands, and all of the Fresh
Brands common stock outstanding immediately after the Effective Time will be
owned by the former common shareholders of the Company. Holders of Company
common stock may, but will not be required to, exchange their certificates for
certificates of Fresh Brands common stock. After the Effective Time, stock
certificates representing shares of Company common stock will be deemed for all
purposes to represent shares of Fresh Brands common stock.
In rendering the opinions contained herein, we have relied on the
following representations you have made to us:
1. The fair market value of the Fresh Brands common stock to be
received in the Share Exchange by each holder of the Company common stock will
be approximately equal to the fair market value of the Company common stock held
by such holder immediately prior to the Effective Time.
2. Fresh Brands has no plan or intention to sell or otherwise dispose
of any of the Company common stock it will receive in the Share Exchange or to
liquidate the Company or to cause the Company to be merged into another
corporation or to sell or otherwise dispose of its assets, except in the
ordinary course of business.
3. After the Share Exchange, Fresh Brands will operate the Company as
a wholly owned subsidiary and the business of the Company will be continued.
4. Fresh Brands has no plan or intention to purchase or redeem any
shares of its common stock issued in the Share Exchange.
5. Following the Share Exchange, the former holders of common stock of
the Company will own all of the outstanding common stock of Fresh Brands and
will, therefore, be in control of Fresh Brands within the meaning of Section
368(c) of the Internal Revenue Code of 1986, as amended (the "Code"). Fresh
Brands has no plan or intention of issuing additional shares of Fresh Brands
common stock, or of issuing any other classes of stock, which would result in
the present shareholders of the Company losing control of Fresh Brands within
the meaning of Section 368(c) of the Code.
6. To the best knowledge of the management of the Company, there is no
plan or intention on the part of the present shareholders of the Company to sell
or otherwise dispose of shares of Fresh Brands common stock to be received in
the Share Exchange in a transaction or series of transactions which would result
in such shareholders losing control of Fresh Brands within the meaning of
Section 368(c) of the Code.
7. Fresh Brands will not be an investment company (within the meaning
of Section 351(e) of the Code).
8. In connection with the Share Exchange, Fresh Brands will not assume
any liabilities of the holders of Company common stock. To the best knowledge of
the management of the Company, the Company common stock to be received by Fresh
Brands will not be subject to any liabilities.
9. Fresh Brands, the Company, and the shareholders of the Company each
will pay their own expenses, if any, incurred in connection with the
transaction.
10. To the best knowledge of the management of the Company, none of
the Company common stock being transferred to Fresh Brands in the Share Exchange
was received in the liquidation of another corporation.
11. Prior to the Share Exchange, there will be no intercorporate debt
between Fresh Brands and the Company that was acquired or will be settled at a
discount.
12. The Company has been filing a consolidated federal income tax
return with PW Trucking, Inc., a Wisconsin corporation.
13. None of the Fresh Brands common stock to be received by the
holders of the Company common stock will be issued in consideration for past or
future services.
In connection with the preparation of this opinion, we have examined
such documents concerning the transaction as we have deemed necessary. We have
based our conclusions on the Code and the Treasury Regulations promulgated
pursuant thereto, as well as judicial and administrative interpretations
thereof. Legislation passed, regulations promulgated, administrative
interpretations or judicial decisions issued subsequent to the date of this
letter may result in a different treatment of the proposed transaction than is
anticipated by our opinion. We have assumed for all purposes that the Share
Exchange and related transactions will be effected as set forth above and as
described in the Registration Statement.
We have not discussed this opinion with representatives of the
Internal Revenue Service. Although rulings have been issued by the Internal
Revenue Service involving similar transactions, there can be no assurance that
the Internal Revenue Service would reach the same or similar conclusions in this
transaction.
2
Based upon the foregoing, we are of the opinion that for United States
federal income tax purposes:
(a) No gain or loss will be recognized by the holders of Company
common stock upon the exchange of such stock for Fresh Brands common stock.
(b) The basis of Fresh Brands common stock to be received by each
holder of Company common stock pursuant to the Plan of Share Exchange will be
the same as such holder's basis in the Company common stock exchanged.
(c) The holding period of Fresh Brands common stock to be received by
each holder of Company common stock in connection with the Plan of Share
Exchange will include the period during which the Company common stock being
exchanged was held by such holder, provided that the Company common stock is
held as a capital asset in the hands of the holder at the Effective Time.
(d) No gain or loss will be recognized by Fresh Brands or the Company
in connection with the Share Exchange.
(e) The basis of the Company common stock received by Fresh Brands
pursuant to the Plan of Share Exchange will be the same as the Company's net
asset basis immediately prior to the Share Exchange, subject to certain
adjustments under Treasury Regulations relating to companies filing consolidated
federal income tax returns.
(f) The holding period of the Company common stock received by Fresh
Brands pursuant to the Plan of Share Exchange will include the holding period
during which such stock was held by the holders of the Company common stock
immediately prior to the Effective Time.
(g) The affiliated group of corporations of which the Company is the
common parent immediately before the Share Exchange will continue in existence
for consolidated federal income tax return purposes, and Fresh Brands will be
the common parent of such affiliated group after the Share Exchange and
corporate restructuring.
This opinion is solely for the benefit of the Company, Fresh Brands,
and the holders of the common stock of the Company immediately prior to the
Share Exchange, and may not be relied upon in any manner by any other person. We
hereby consent to the references to our firm in the Registration Statement and
to the filing of this opinion as an exhibit to the Registration Statement. In
giving our consent, we do not admit that we are "experts" within the meaning of
Section 11 of the Securities Act or within the category of persons whose consent
is required by Section 7 of the Securities Act.
Very truly yours,
/s/ Foley & Lardner
FOLEY & LARDNER