Exhibit 8
__________, 1995
BY HANDDRAFT
Mr. Leon K. Poche, Jr.
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Mr. Nicholas P. Trist, Jr.
Peoples Bancshares, Inc.
P. O. Box 1099
Chalmette, Louisiana 70044-1099
Dear Messrs. Poche and Trist:
This opinion is being furnished to you in connection with the
proposed acquisition of Peoples Bancshares, Inc. ("Holding") and
its wholly owned banking subsidiary, Peoples Bank & Trust Company
of St. Bernard ("Bank"), by First Commerce Corporation ("FCC"),
which is expected to be completed on __________, 1995 ("the
Effective Date"). You have requested our opinion concerning the
following:
Whether the merger of Holding into FCC will qualify as a
reorganization under Section 368(a)(1)(A) of the Internal Revenue
Code of 1986, as amended ("the Code").
That the exchange of Holding common stock to the extent
exchanged for FCC common stock will not give rise to gain or loss
for federal income tax purposes to the holders of Holding common
stock with respect to such exchange.
Whether the merger of Bank into First National Bank of Commerce
("Acquiring Bank"), a wholly-owned banking subsidiary of FCC,
will qualify as a reorganization under Section 368(a)(1)(A) of
the Code.
That the exchange of Bank common stock to the extent exchanged
for FCC common stock will not give rise to gain or loss for
federal income tax purposes to the holders of Bank common stock
with respect to such exchange.
You have asked for our opinion on the federal income tax
consequences to FCC, Holding, Bank, Acquiring Bank and the
stockholders of Holding and Bank. We have not considered any
nonincome tax, state, local or foreign income tax consequences,
and, therefore, do not express any opinion regarding the
treatment that would be given the merger by the applicable
authorities on any nonincome tax or any state, local or foreign
tax issues. We also express no opinion on nontax issues, such as
corporate law or securities law matters, including, but not
limited to, all securities law disclosure requirements.
In rendering our opinion, we have relied upon the accuracy and
completeness of the facts and information as contained in the
Agreement and Plan of Merger dated __________, 1995 ("the
Agreement"), including all exhibits attached thereto, and the
representations included below. To the extent there are any
changes to the Agreement or representations, our opinion may be
affected accordingly.
The discussion and conclusions set forth below are based upon
the Code, the Treasury Regulations, and existing administrative
and judicial interpretations thereof as of the Effective Date,
all of which are subject to change. All section references are
to the Internal Revenue Code of 1986, as amended, unless
otherwise stated. If there is a change in the Code, the Treasury
Regulations or public rulings thereunder, the current Internal
Revenue Service rulings or releases, or in the prevailing
judicial interpretation of the foregoing, the opinion expressed
herein would necessarily have to be re-evaluated in light of any
such changes. We have no responsibility to update this opinion
for events, transactions, changes in the above-listed law and
authority or circumstances occurring after the Effective Date.
This opinion is solely for the benefit of Holding, Bank, and FCC
and is not intended to be relied upon by anyone other than
Holding, Bank, and FCC. Although you do hereby have our express
consent to inform Acquiring Bank, and Holding and Bank common
stockholders of our opinion by including copies of this letter as
an exhibit to the Agreement and as an exhibit in the Registration
Statement on Form S-4 for the proposed transactions, we assume no
responsibility for tax consequences to them. Instead, each of
these parties must consult and rely upon the advice of his/her
counsel, accountant or other advisor. Except to the extent
expressly permitted hereby, and without the prior written consent
of this firm, this letter may not be quoted in whole or in part
or otherwise referred to in any documents or delivered to any
other person or entity.
Proposed Transactions
Our understanding of the proposed transactions, as described in
the Agreement, is as follows:
A.Holding will be merged with and into FCC ("Holding Company
Merger") on the Effective Date under the Articles of
Incorporation of FCC, pursuant to Louisiana Business Corporation
Law.
B.On the Effective Date and pursuant to the Holding Company
Merger, the common stockholders of Holding will receive shares of
FCC common stock proportionate in value, based on the terms
contained in Article 2 Section 1(a) of the Agreement. The number
of shares of FCC common stock to be received by the common
stockholders of Holding will represent an ownership interest in
FCC common stock of less than 50% of the total outstanding stock
of FCC. In lieu of issuing fractional shares of FCC common stock
as a result of the merger, common stockholders of Holding will be
entitled to receive a cash payment equal to such fractional share
multiplied by the designated value of a share of FCC common
stock.
C.Bank will be merged with and into Acquiring Bank ("Bank
Merger") on the Effective Date immediately subsequent to the
Holding Company Merger, pursuant to Federal law (12 U.S.C.
Section 215a).
D.On the Effective Date and pursuant to the Bank Merger, the
common stockholders of Bank other than Holding ("Bank Minority
Shareholders") will receive shares of FCC common stock
proportionate in value, based on the terms contained in Article 2
Section 1(b) of the Agreement. In lieu of issuing fractional
shares of FCC common stock as a result of the Bank Merger, Bank
Minority Shareholders will be entitled to receive a cash payment
equal to such fractional share multiplied by the designated value
of a share of FCC common stock.
Unless stockholders of Holding common stock holding at least
eighty (80) percent of the voting rights of Holding approve the
plan of reorganization, objecting stockholders of Holding may
dissent from the Holding Company Merger, and instead receive cash
in exchange for their shares of Holding common stock, based on
the fair market value of such stock determined under Section 131
of the Louisiana Business Corporation Law (La. R.S. Section
12:131).
Additional Representations
In addition to the representations included in the Agreement,
the following representations have been made to us by
representatives of FCC and Holding regarding the Holding Company
Merger:
a)FCC, Holding and the stockholders of Holding will pay their
respective expenses, if any, incurred in connection with the
successful consummation of the transaction.
b)There is no intercorporate indebtedness existing between
Holding and FCC, that was issued, acquired, or will be settled at
a discount.
c)The fair market value of the assets of Holding transferred to
FCC will equal or exceed the sum of the liabilities assumed by
FCC plus the amount of liabilities, if any, to which the
transferred assets are subject.
d)None of the compensation received by any stockholder-employees
of Holding will be separate consideration for, or allocable to,
any of their shares of Holding common stock; none of the shares
of FCC common stock received by any stockholder-employees will be
separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any stockholder-employees
will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's length for
similar services.
e)Holding will be merged with and into FCC under the Articles of
Incorporation of FCC, pursuant to Louisiana Business Corporation
Law.
f)The Holding common stockholders will have unrestricted rights
of ownership of FCC common stock received in the transaction, and
their ability to retain the FCC common stock received in the
transaction will not be limited in any way.
g)The ratio for the exchange of shares of Holding common stock
for FCC common stock in the transaction was negotiated through
arm's length bargaining. Accordingly, the fair market value of
the FCC common stock to be received by Holding common
stockholders in the transaction will be approximately equal to
the fair market value of the Holding common stock surrendered by
such stockholders in exchange therefor.
The following representations have been made to us by
representatives of FCC regarding the Holding Company Merger:
a)FCC has no plan or intention to re-acquire any of its stock
issued in the transaction.
b)FCC has no plan or intention to sell or otherwise dispose of
any of the assets of Holding acquired in the transactions, except
for dispositions made in the ordinary course of business or
transfers described in Section 368(a)(2)(C) of the Code and
except for Bank common stock to be canceled in the Bank Merger.
c)Following the transactions, FCC will continue the historic
businesses of Holding or use a significant portion of these
historic business assets in the operation of a trade or business.
d)The payment of cash in lieu of fractional shares of FCC common
stock is solely for the purpose of avoiding the expense and
inconvenience to FCC of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the transaction to the Holding
stockholders instead of issuing fractional shares of FCC common
stock will not exceed (1) one percent of the total consideration
that will be issued in the transaction to the Holding
stockholders in exchange for their shares of Holding common
stock. The fractional share interests of each Holding
stockholder will be aggregated, and no Holding stockholder will
receive cash for such fractional share interests in an amount
equal to or greater than the value of one full share of FCC
common stock.
e)The assumption by FCC of the liabilities of Holding pursuant to
the transactions is for bona fide business purposes and the
principal purpose of such assumption is not the avoidance of
federal income tax on the transfer of assets of Holding pursuant
to the transactions.
f)FCC is not an investment company as defined in Sections
368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
g)The proposed transaction is being undertaken for reasons
germane to the continuance of the business of FCC.
The following representations have been made to us by
representatives of Holding regarding the Holding Company Merger:
a)There is no plan or intention by the Holding common
stockholders who own one percent or more of the stock, and to the
best of the knowledge of the management of Holding, there is no
plan or intention on the part of the remaining common
stockholders to sell, exchange, or otherwise dispose of a number
of shares of FCC common stock received in the transaction that
would reduce the stockholders' ownership of FCC common stock to a
number of shares having a value, as of the Effective Date, of
less than (50) fifty percent of the value of all the formerly
outstanding common stock of Holding as of the same date. For
purposes of this representation, shares of Holding common stock
exchanged for cash in lieu of fractional shares of FCC stock
will be treated as outstanding Holding common stock on the
Effective Date. Moreover, shares of Holding common stock and
shares of FCC common stock held by Holding stockholders and
otherwise sold, redeemed, or disposed of prior to the transaction
in contemplation thereof, or subsequent to the transaction, will
be considered in making this representation.
b)The liabilities of Holding assumed by FCC, and the liabilities
to which the transferred assets of Holding are subject were
incurred by Holding in the ordinary course of business.
c)Holding is not an investment company as defined in Sections
368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
d)The proposed transaction is being undertaken for reasons
germane to the continuance of the business of Holding.
In addition to the representations included in the Agreement,
the following representations have been made to us by
representatives of FCC, Acquiring Bank, Holding, and Bank
regarding the Bank Merger:
a)FCC, Acquiring Bank, Bank, Holding, and Bank Minority
Shareholders will pay their respective expenses, if any, incurred
in connection with the successful consummation of the
transaction.
b)There is no intercorporate indebtedness existing between FCC
and Bank or between Acquiring Bank and Bank that was issued,
acquired, or will be settled at a discount.
c)The fair market value of the assets of Bank transferred to
Acquiring Bank will equal or exceed the sum of the liabilities
assumed by Acquiring Bank plus the amount of liabilities, if any,
to which the transferred assets are subject.
d)None of the compensation received by any stockholder-employees
of Bank will be separate consideration for, or allocable to, any
of their shares of Bank common stock; none of the shares of FCC
common stock received by any stockholder-employees will be
separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any stockholder-employees
will be for services actually rendered and will be commensurate
with amounts paid to third parties bargaining at arm's length for
similar services.
e)Bank will be merged with and into Acquiring Bank pursuant to
Federal law (12 U.S.C. Section 215a).
f)Bank Minority Shareholders will have unrestricted rights of
ownership of FCC common stock received in the transaction, and
their ability to retain the FCC common stock received in the
transaction will not be limited in any way.
g)The ratio for the exchange of shares of Bank common stock for
FCC common stock in the transaction was negotiated through arm's
length bargaining. Accordingly, the fair market value of the FCC
common stock to be received by Bank Minority Shareholders in the
transaction will be approximately equal to the fair market value
of the Bank common stock surrendered by such stockholders in
exchange therefor.
h)Acquiring Bank will acquire at least 90 percent of the fair
market value of the net assets and at least 70 percent of the
fair market value of the gross assets held by Bank immediately
prior to the transaction. For purposes of this representation,
amounts paid by Bank to dissenters, amounts used by Bank to pay
its reorganization expenses, amounts paid by Bank to Bank
Minority Shareholders who received cash or other property, and
all redemptions and distributions (except for regular, normal
dividends) made by Bank immediately preceding the transfer will
be included as assets of Bank immediately prior to the
transaction.
The following representations have been made to us by
representatives of FCC and Acquiring Bank regarding the Bank
Merger:
a)FCC has no plan or intention to re-acquire any of its stock
issued in the transaction.
b)FCC has no plan or intention to cause Acquiring Bank to sell or
otherwise dispose of any of the assets of Bank acquired in the
transactions, except for dispositions made in the ordinary course
of business or transfers described in Section 368(a)(2)(C) of the
Code.
c)Following the transactions, Acquiring will continue the
historic businesses of Bank or use a significant portion of these
historic business assets in the operation of a trade or business.
d)The payment of cash in lieu of fractional shares of FCC common
stock is solely for the purpose of avoiding the expense and
inconvenience to FCC of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the transaction to the Bank
Minority Shareholders instead of issuing fractional shares of FCC
common stock will not exceed (1) one percent of the total
consideration that will be issued in the transaction to the Bank
Minority Shareholders in exchange for their shares of Bank common
stock. The fractional share interests of each Bank Minority
Shareholder will be aggregated, and no Bank Minority Shareholder
will receive cash for such fractional share interests in an
amount equal to or greater than the value of one full share of
FCC common stock.
e)The assumption by Acquiring Bank of the liabilities of Bank
pursuant to the transactions is for bona fide business purposes
and the principal purpose of such assumption is not the avoidance
of federal income tax on the transfer of assets of Bank pursuant
to the transactions.
f)FCC and Acquiring Bank are not investment companies as defined
in Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
g)The proposed transaction is being undertaken for reasons
germane to the continuance of the business of FCC and Acquiring
Bank.
h)Prior to the transaction, FCC will be in control of Acquiring
Bank within the meaning of Section 368(c) of the Code.
i)Following the transaction, Acquiring Bank has no plan or
intention to issue additional shares of its stock that would
result in FCC losing control of Acquiring Bank within the meaning
of Section 368(c).
k)No stock of Acquiring Bank will be issued in the transaction.
The following representations have been made to us by
representatives of Bank regarding the Bank Merger:
a)The liabilities of Bank assumed by Acquiring Bank, and the
liabilities to which the transferred assets of Bank are subject
were incurred by Bank in the ordinary course of business.
b)Bank is not an investment company as defined in Sections
368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
c)The proposed transaction is being undertaken for reasons
germane to the continuance of the business of Bank.
Analysis of Applicable Federal Tax Provisions
Section 354(a)(1) addresses the effects of corporate
reorganizations on shareholders, providing in general that no
gain or loss shall be recognized if stock or securities in a
corporation a party to a reorganization are, in pursuance of the
plan of reorganization, exchanged solely for stock or securities
in such corporation or in another corporation, a party to the
reorganization.
For purposes of Code Section 354, the terms "reorganization" and
"party to a reorganization" mean only a reorganization or a party
to a reorganization as defined in Sections 368(a) and 368(b).
Section 368(a)(1)(A) states that the term reorganization includes
a statutory merger or consolidation. Reg. Section 1.368-2(b)(1)
states that in order for a transaction to qualify as a
reorganization under Section 368(a)(1)(A), the transaction must
be a merger or consolidation effected pursuant to the corporation
laws of the United States or State or Territory or the District
of Columbia. Under Section 368(b), the term party to a
reorganization includes both corporations in the case of a
reorganization resulting from the acquisition by one corporation
of stock or properties of another.
Section 368(a)(2)(D) provides that the acquisition by one
corporation in exchange for stock of a corporation which is in
control of the acquiring corporation, of substantially all of the
properties of another corporation shall not disqualify a
transaction under Section 368(a) if no stock of the acquiring
corporation is used in the transaction and such transaction would
have qualified under Section 368(a)(1)(A) had the merger been
into the controlling corporation.
The regulations under Section 368 require as a part of a
reorganization a continuity of the business enterprise under the
modified corporate form, a bona fide business purpose for the
reorganization, and a continuity of interest therein on the part
of those persons who, directly or indirectly, were owners of the
enterprise prior to the reorganization. Reg. Section 1.368-
1(d)(2) states that the continuity of business enterprise
requirement is met if the acquiring corporation either continues
the acquired corporation's historic business or uses a
significant portion of the acquired corporation's business assets
in the operation of a trade or business. Based on the
representations set forth above, the continuity of business
enterprise requirement is met with respect to the assets and
business operations of Holding and Bank.
Reg. Section 1.368-2(g) indicates that in addition to coming
within the scope of the specific language of Sec. 368(a), a
reorganization must also be "undertaken for reasons germane to
the
continuance of the business of a corporation a party to the
reorganization." If the transaction or series of transactions
has no business or corporate purpose, then the plan is not a
reorganization pursuant to Section 368(a). [Reg. Section 1.368-
1(c).] Based on the representations set forth above, the
transactions meet the business purpose requirement.
The continuity of interest requirement does not require that all
shareholders of the acquired corporation have a proprietary
interest in the surviving corporation after the acquisition; it
is not even necessary for a substantial percentage of such
shareholders to have such an interest. Rather, the IRS announced
in Rev. Proc. 77-37 that it would rule that the continuity of
interest requirement is met so long as one or more of the
acquired corporation's shareholders retain a sufficient
proprietary interest in the continuing corporation. The IRS
indicated in Rev. Proc. 77-37 that a sufficient proprietary
interest is an interest with a value that is at least 50% of the
total equity value of the acquired corporation.
In addition to meeting the continuity of interest requirement
immediately after the reorganization, the former shareholders of
the acquired corporation must retain their interest in the
acquiring corporation for some time after the reorganization.
The courts have ruled that the tax-free nature of the
reorganization may be retroactively invalidated if the continuity
of interest is not maintained either because, at the time of the
reorganization, the shareholders intended to dispose of the
proprietary interest soon after the reorganization (Christian
Est. v. Comr., T.C. Memo 1989-413) or because a shareholder
disposes of stock immediately following the reorganization in
accordance with a pre-existing commitment to sell (American Wire
Fabrics Corp. v. Comr., 16 TC 607). The courts have generally
looked to the intent of the shareholders at the time of the
reorganization to dispose of their interests in determining
whether the continuity of interest requirement is subsequently
violated.
The Internal Revenue Service has ruled that the continuity of
interest requirement was met in situations similar to the
proposed transactions (PLR 8839036, PLR 8903054, PLR 9319017 and
PLR 9325026). It should be noted, however, that a private letter
ruling (PLR) is directed only to the taxpayer who requested it.
Section 6110(j)(3) provides that it may not be used or cited as
precedent. On the other hand, a PLR does represent an indication
of how the IRS may view the tax consequences of a taxpayer with
similar facts and circumstances. In these rulings, a corporation
and its wholly-owned subsidiary were simultaneously merged into
the acquiring parent and its wholly-owned subsidiary,
respectively, as part of the same overall transaction.
Based on the above representations made by representatives of
Holding and Bank, the continuity of interest requirement is met
with respect to the transaction.
Section 356(a)(1) provides that if Section 354 would apply to an
exchange but for the fact that the property received in the
exchange consists not only of property permitted to be received
under Section 354 without the recognition of gain but also of
other property or money then the gain, if any, to the recipient
shall be recognized but not in excess of the sum of money and the
fair market value of the property received.
Section 356(c) states that no loss from the exchange may be
recognized by the shareholder.
In other official pronouncements, the Internal Revenue Service
has treated the distribution of cash distributed as part of a
reorganization and in a transaction subject to Section 356
considerations by applying the redemption principles under
Section 302. Section 302 provides, in part, that a redemption
will be treated as a distribution in part or full payment in
exchange for stock if it can meet the tests of that section.
In Rev. Rul. 66-365, the IRS announced that in a transaction
qualifying as a reorganization under Section 368(a)(1)(A) of the
Code where a cash payment is made by the acquiring corporation in
lieu of fractional shares and is not separately bargained for,
such cash payment will be treated under Section 302 of the Code
as in redemption of fractional share interests. Therefore, each
shareholder's redemption will be treated as a distribution in
full payment in exchange for his or her fractional share interest
under Section 302(a) of the Code and accorded capital gain or
loss treatment provided the redemption is not essentially
equivalent to a dividend and that the fractional shares redeemed
constitute a capital asset in the hands of the holder as
discussed below. In Rev. Proc. 77-41, the IRS stated that "a
ruling will usually be issued under Section 302(a) of the Code
that cash to be distributed to shareholders in lieu of fractional
share interests arising in corporate reorganizations...will be
treated as having been received in part or in full payment in
exchange for the stock redeemed if the cash distribution is
undertaken solely for the purpose of saving the corporation the
expense and inconvenience of issuing and transferring fractional
shares, and is not separately bargained-for consideration."
Under Section 302, where there is a complete redemption of all
of a shareholder's stock in a corporation (after consideration of
the constructive ownership rules of Section 302(c)), the
redemption payment is treated as made entirely in exchange for
the shareholder's stock in the corporation (Section 302(b)(3)).
Under Section 358(a)(1), in the case of an exchange to which
Section 354 or Section 356 applies, the basis of property which
is permitted to be received under such section without the
recognition of gain or loss shall be the same as that of the
property exchanged, decreased by the amount of any money received
by the recipient and the amount of loss recognized by the
recipient as a result of the exchange and increased by the amount
which was treated as a dividend and the amount of other gain
recognized by the recipient as a result of the transaction.
It should be noted that where cash is received in lieu of
fractional shares, the substance of the transaction is that of a
hypothetical receipt of the fractional shares and then a
redemption of such shares. Therefore, the basis that is to be
allocated to the stock of the acquiring corporation received must
be allocated to the shares retained and the fractional shares
hypothetically received. The gain or loss attributable to the
receipt of cash in lieu of fractional shares is measured by
comparing the cash received with the basis allocated to the
fractional shares that are hypothetically received, and such gain
or loss is recognized as discussed earlier pursuant to Rev. Rul.
66-365.
Code Section 361(a) states that, as a general rule, no gain or
loss is to be recognized by a corporation if such corporation is
a party to a reorganization and exchanges property, in pursuance
of the plan of reorganization, solely for stock or securities in
another corporation a party to the reorganization.
Section 361(b) states that if Section 361(a) would apply to an
exchange but for the fact that the property received in exchange
consists not only of stock or securities afforded nonrecognition
treatment under Section 361(a), but also of other property or
money, then provided the corporation receiving such other
property or money distributes it in pursuance to the plan of
reorganization, no gain to the corporation shall be recognized
from the exchange. Section 361(a) states that as a general rule
no gain or loss shall be recognized to a corporation a party to a
reorganization on the distribution to its shareholders of any
stock in another corporation which is a party to the
reorganization if such stock was received by the distributing
corporation in the exchange.
Section 1032(a) states that no gain or loss shall be recognized
to a corporation on the receipt of money or other property in
exchange for such corporation's stock, including treasury stock.
Code Section 362(b) states that the basis of property received
by the acquiring corporation in a reorganization is the same as
it would be in the hands of the transferor of the assets,
increased by any gain recognized by the transferor. The
transferor for purposes of the preceding sentence in the instant
case is Holding.
Section 1221 defines a capital asset as property held by the
taxpayer which is not inventory or other property held by the
taxpayer primarily for sale to customers in the ordinary course
of a trade or business, property used in the taxpayer's trade or
business subject to the allowance for depreciation under Section
167, a copyright, literary, musical or artistic composition, a
letter or memorandum, or similar property created by the personal
efforts of the taxpayer, accounts or notes receivable acquired in
the ordinary course of a trade or business for services rendered
or from the sale of inventory or other property held by the
taxpayer primarily for sale to customers in the ordinary course
of business, or a publication of the United States Government
which is received from the United States Government or any agency
thereof other than by purchase at the price at which it is
offered for sale to the public.
Section 1223(1) states that in determining the period for which
a taxpayer has held property received in an exchange, there shall
be included the period for which he or she held the property
exchanged if the property has, for the purpose of determining
gain or loss from a sale or exchange, the same basis as the
property exchanged and the property exchanged was a capital asset
as defined in Section 1221 as of the date of the exchange.
Section 1223(2) states that for determining the period for which
the taxpayer has held property however acquired there shall be
included the period for which such property was held by another
person if the property has the same basis in whole or in part in
his hands as it would have had in the hands of such other person.
Subchapter P of Chapter 1 of the Code provides limitations on
the recognition of capital gains and losses including, but not
limited to, the allowance of capital losses to the extent of
capital gains with respect to corporate taxpayers and the
allowance of up to $3,000 of net capital losses with respect to
taxpayers other than corporate taxpayers.
Opinion
Based upon all of the foregoing, including representations of
the management of FCC and the management and Board of Directors
of Holding, it is our opinion with respect to the Holding Company
Merger that:
a)The merger of Holding with and into FCC, as described above,
will constitute a reorganization under Section 368 of the Code
(Section 368(a)(1)(A)).
b)Holding and FCC will each be "a party to a reorganization"
(Section 368(b)).
c)No gain or loss will be recognized by the common stockholders
of Holding provided they only receive FCC common stock in
exchange for surrendered Holding common stock pursuant to the
plan of reorganization (Section 354(a)(1)).
d)The tax basis of the FCC common stock received by Holding
common stockholders will be the same as the basis of the Holding
common stock surrendered in exchange therefor, decreased by the
amount of basis allocated to the fractional shares that are
hypothetically received by the stockholder and redeemed for cash,
and increased by any gain recognized on the exchange (not
including any gain recognized for the receipt of cash in lieu of
fractional shares) (Section 358(a)(1)).
e)The holding period of the FCC common stock received by the
Holding common stockholders will include the period during which
the Holding common stock surrendered in exchange therefor was
held, provided that the Holding common stock is held as a capital
asset in the hands of the Holding stockholders on the Effective
Date (Section 1223(1)).
f)The payment of cash in lieu of fractional share interests of
FCC common stock will be treated as if each fractional share was
distributed as part of the exchange and then redeemed by FCC.
Pursuant to Section 302(a) of the Code, these cash payments will
be treated as having been received as distributions in full
payment in exchange for the FCC common stock. Any gain or loss
recognized upon such exchange (as determined under Section 1001
and subject to the limitations of Section 267) will be capital
gain or loss provided the fractional share would constitute a
capital asset in the hands of the exchanging stockholder (Rev.
Rul. 66-365 and Rev. Proc. 77-41).
g)Each shareholder of Holding who elects to dissent from the
merger transaction involving Holding and FCC under the provisions
of Section 131 of the Business Corporation Law of Louisiana, and
receives cash in exchange for his shares of Holding common stock,
will be treated as receiving such payment in complete redemption
of his shares of Holding, provided such shareholder does not
actually or constructively own any Holding common stock after the
exchange under the provisions and limitations of Section 302.
h)No gain or loss will be recognized by Holding on the transfer
of all of its assets to FCC solely in exchange for FCC common
stock and cash in lieu of fractional shares which is subsequently
distributed to Holding common stockholders pursuant to the plan
of reorganization (Section 361).
i)No gain or loss will be recognized by FCC on the receipt by FCC
of substantially all of the assets of Holding in exchange for FCC
stock (Section 1032(a)).
j)The tax basis of Holding's assets in the hands of FCC will be
the same as the basis of those assets in the hands of Holding
immediately prior to the merger (Section 362(b)). The tax basis
of Holding's assets in the hands of FCC will not be increased by
any cash paid to dissenters or cash paid in lieu of fractional
shares.
k)The holding period of the assets of Holding in the hands of FCC
will include the period during which such assets were held by
Holding (Section 1223(2)).
Based upon all of the foregoing, including representations of
the management of FCC and Acquiring Bank and the management and
Board of Directors of Holding and Bank, it is our opinion with
respect to the Bank Merger that:
a)The acquisition by Acquiring Bank of substantially all of the
assets of Bank solely in exchange for FCC common stock and the
assumption by Acquiring Bank of the liabilities of Bank will
qualify as a reorganization under the provisions of Section
368(a)(1)(A) and 368(a)(2)(D). For purposes of this opinion,
"substantially all" means at least 90 percent of the fair market
value of the net assets and at least 70 percent of the fair
market value of the gross assets of Bank held immediately prior
to the proposed transaction.
b)FCC, Acquiring Bank, and Bank will each be a "party to a
reorganization" (Section 368 (b)).
c)No gain or loss will be recognized by FCC or Acquiring Bank on
the merger of Bank into Acquiring Bank (Section 354(a)(1)).
d)No gain or loss will be recognized by Bank on the transfer of
all of its assets to Acquiring Bank pursuant to the plan of
reorganization (Section 361).
e)The tax basis of Bank's assets in the hands of Acquiring Bank
will be the same as the basis of those assets in the hands of
Bank immediately prior to the transaction (Section 362(b)). The
tax basis of Bank's assets in the hands of Acquiring Bank will
not be increased by any cash paid to dissenters or cash paid in
lieu of fractional shares.
f)The holding period of the assets of Bank in the hands of
Acquiring Bank will include the period during which such assets
were held by Bank (Section 1223(2)).
g)No gain or loss will be recognized by Bank Minority
Shareholders provided they only receive FCC common stock in
exchange for Bank common stock. (Section 354(a)(1)).
h)The tax basis of the FCC common stock received by Bank Minority
Shareholders will be the same as the basis of the Bank common
stock surrendered in exchange therefor, decreased by the amount
of basis allocated to the fractional shares that are
hypothetically received by the stockholder and redeemed for cash,
and increased by any gain recognized on the exchange (not
including any gain recognized for the receipt of cash in lieu of
fractional shares) (Section 358(a)(1)).
i)The holding period of the FCC common stock received by Bank
Minority Shareholders will include the period during which the
Bank common stock surrendered in exchange therefor was held,
provided that the Bank common stock is held as a capital asset in
the hands of the Bank Minority Shareholders on the Effective Date
(Section 1223(1)).
j)The payment of cash in lieu of fractional share interests of
FCC common stock will be treated as if each fractional share was
distributed as part of the exchange and then redeemed by FCC.
Pursuant to Section 302(a) of the Code, these cash payments will
be treated as having been received as distributions in full
payment in exchange for the FCC common stock. Any gain or loss
recognized upon such exchange (as determined under Section 1001
and subject to the limitations of Section 267) will be capital
gain or loss provided the fractional share would constitute a
capital asset in the hands of the exchanging stockholder (Rev.
Rul. 66-365 and Rev. Proc. 77-41).
We express no opinion on the impact, if any, on any other
sections of the Code, including but not limited to Section 382,
other than that as stated immediately above, and neither this
opinion nor any prior statements are intended to imply or to be
an opinion on any other matters.
In analyzing the authorities relevant to the potential tax
issues outlined in the opinions we have applied the standards of
"substantial authority" and "more likely than not proper," as
used in Section 6662 under current law. Based upon our analysis,
we have concluded that there is substantial authority for the
indicated tax treatment of the transaction, and we also believe
the indicated tax treatment of the transaction is more likely
than not proper.
The opinions expressed herein are based solely upon our
interpretation of the Code and income tax regulations as further
interpreted by court decisions, rulings, and procedures issued by
the Internal Revenue Service, as of the effective date of this
letter. Our opinions may be subject to change in the event of
changes in any of the foregoing authorities, some of which could
be retroactive. The opinions expressed herein are not binding on
the Internal Revenue Service, and there can be no assurance that
the Internal Revenue Service will not take a position contrary to
any of the opinions expressed herein, or if the Internal Revenue
Service took such a position, whether it would be sustained by
the courts. Further, Acquiring Bank, and Holding and Bank common
stockholders, are urged to discuss the consequences of the
proposed transactions with their own tax advisors.
Very truly yours,
ARTHUR ANDERSEN LLP
By
Charles A. Giraud III