April 8, 1996
Board of Directors
First Merchants Corporation
200 E. Jackson Street, Box 792
Muncie, IN 47305
Board of Directors
Randolph County Bancorp
122 West Washington Street
Winchester, IN 47394
Re: Merger of Randolph County Bancorp with and into First Merchants
Corporation
Ladies and Gentlemen:
We have acted as special counsel to First Merchants Corporation, an
Indiana corporation registered as a bank holding company under the Bank Holding
Company Act of 1956 ("First Merchants"), in connection with the proposed merger
of Randolph County Bancorp, an Indiana corporation registered as a bank holding
company under the Bank Holding Company Act of 1956 ("Randolph County"), with and
into First Merchants, pursuant to the terms of the Agreement of Reorganization
and Merger between First Merchants and Randolph County, dated January 17, 1996
("Merger Agreement"), as described in the Registration Statement on Form S-4 to
be filed by First Merchants with the Securities and Exchange Commission on
or about April 8, 1996 ("Registration Statement").
This opinion is being rendered as required by Section 9 of the Merger
Agreement. All capitalized terms herein, unless otherwise specified, have the
meaning assigned to them in the Registration Statement.
In connection with this opinion, we have relied on and have examined, and
we are familiar with originals or copies of, certified or otherwise identified
to our satisfaction, the (i) Merger Agreement, the (ii) Registration Statement,
and (iii) such other documents as we have deemed necessary or appropriate in
order to enable us to render the opinions below. In our examination, we have
assumed the genuineness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified,
conformed or photostatic copies and the authenticity of the originals of such
copies. This opinion is subject to the receipt by us prior to the effective time
of the Merger of certain written representations and covenants of Randolph
County and First Merchants, the accuracy and truthfulness of which we shall
assume and rely upon without investigation.
In rendering our opinion, we have considered the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, pertinent judicial authorities, interpretive rulings of the
Internal Revenue Service and such other authorities as we have considered
relevant.
Based upon and subject to the foregoing, provided that the merger of
Randolph County with and into First Merchants qualifies as a statutory merger
under applicable state law, and assuming that (i) after the transaction, First
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Board of Directors
April 8, 1996
Page 2
Merchants, as successor of Randolph County, will hold substantially all of its
assets, and that (ii) in the transaction, the Randolph County shareholders will
exchange an amount of stock constituting majority control of Randolph County
solely for First Merchants common stock, we are of the opinion that the Merger
will, under current law, constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the Code and that Randolph County and First Merchants
will each be a party to the reorganization within the meaning of Section 368(b)
of the Code. As a reorganization under Section 368(a)(1)(A) of the Code, the
Merger will have the following federal income tax consequences for Randolph
County shareholders, Randolph County, and First Merchants:
1. No gain or loss will be recognized by Randolph County
shareholders who exchange all of their Randolph County common stock for
First Merchants common stock pursuant to the Merger, except to the extent
of gain or loss attributable to any cash received in lieu of receipt of a
fractional share of First Merchants common stock.
2. The basis of First Merchants common stock (including deemed
fractional share interests) received by Randolph County shareholders who
exchange all of their Randolph County common stock for First Merchants
common stock will be the same as the basis of the Randolph County common
stock surrendered in exchange therefor.
3. The holding period of the First Merchants common stock
received by the Randolph County shareholders (including deemed fractional
share interests) who exchange all of their Randolph County common stock
for First Merchants common stock will include the period during which the
Randolph County common stock was held, provided the Randolph County
common stock was held as a capital asset on the date of the exchange.
4. Where a cash payment is received by a Randolph County
shareholder in lieu of fractional shares of First Merchants common stock,
the cash payment will be treated as a distribution in redemption of the
deemed fractional share interest by First Merchants, subject to the
provisions and limitations of Section 302 of the Code. Where such
exchange qualifies under Section 302(a) of the Code, such shareholder
will recognize a capital gain or loss provided that the Randolph County
common stock was held as a capital asset on the date of the Merger.
5. Any Randolph County shareholder who perfects dissenter's
rights and receives solely cash in exchange for such shareholder's
Randolph County common stock shall be treated as having received such
cash as a distribution in redemption of the Randolph County common stock
subject to the provisions and limitations of Section 302 of the Code. If,
as a result of such distribution, such Randolph County shareholder owns
no First Merchants common stock, either directly or through the
application of the constructive ownership rules of Section 318(a) of the
Code, the redemption will be a complete termination of interest within
the meaning of Section 302(b)(3) of the Code and the cash will be treated
as a distribution in full payment and exchange for the Randolph County
common stock as provided in Section 302(a) of the Code. Under Section
1001 of the
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Board of Directors
April 8, 1996
Page 3
Code, gain or loss (subject to any applicable limitations of the Code)
will be realized and recognized by such Randolph County shareholder in an
amount equal to the difference between the redemption price and the
adjusted basis of the Randolph County common stock surrendered in
exchange therefor.
6. No gain or loss will be recognized by Randolph County or
First Merchants in connection with the transaction.
7. The basis of the assets of Randolph County acquired by First
Merchants in the Merger will be the same as the basis of such assets in
the hands of Randolph County immediately prior to the Merger.
The opinions expressed herein represent our conclusions as to the
application of existing federal income tax law to the facts as presented to us,
and we give no assurance that changes in such law or any interpretation thereof
will not affect the opinions expressed by us. Moreover, there can be no
assurance that these opinions will not be challenged by the Internal Revenue
Service or that a court considering the issues will not hold contrary to such
opinions. We express no opinion on the treatment of this transaction under the
income tax laws of any state or other taxing jurisdictions. We assume no
obligation to advise of any changes concerning the above, whether or not deemed
material, which may hereafter come or be brought to our attention.
Except as set forth above, we express no opinion as to the tax
consequences to any party, whether federal, state, local or foreign, of the
Merger or of any transactions related to the Merger or contemplated by the
Merger Agreement. This opinion is addressed to you and is being furnished to you
solely for your use in connection with the transaction that is the subject of
the Merger Agreement. We assume no professional responsibility to any other
person or entity. Accordingly, the opinions expressed herein are not to be
utilized or quoted by, delivered or disclosed to, in whole or in part, any other
person, corporation, entity or governmental authority, or for any other purpose,
without the prior written consent of this Firm. We hereby consent to the filing
of this opinion as an exhibit to the Registration Statement.
Very truly yours,
BINGHAM SUMMERS WELSH & SPILMAN
Ex. 8-3