EXHIBIT 8.2
June 26, 1996
Board of Directors
Newnan Holdings, Inc.
19 Jefferson Street
Newnan, GA 30264
Board of Directors
Southside Financial Group, Inc.
675 N. Jeff Davis Drive
Fayetteville, GA 30214
Ladies and Gentlemen:
You have requested our opinion with respect to certain federal income
tax consequences relating to the acquisition (the "Acquisition") of Southside
Financial Group, Inc., a corporation organized and existing under the laws of
the State of Georgia, ("Southside") by Newnan Holdings, Inc., a Georgia
corporation (the "Holding Company") as described in the Agreement and Plan of
Merger, by and among the Newnan Savings Bank, FSB, a bank organized under the
laws of the United States of America ("Newnan"), the Holding Company,
Southside, Citizens Bank and Trust of Fayette County, a bank organized and
existing under the laws of the State of Georgia, and Interim Citizens
Corporation, a corporation organized and existing under the laws of the State
of Georgia ("Interim Citizens") dated as of November 2, 1995 (the
"Acquisition Agreement").
Pursuant to the terms of the Acquisition Agreement, Newnan has agreed to
use its best efforts to effect the formation of a holding company (the
"Reorganization") for Newnan simultaneously with the Acquisition pursuant to
a Plan of Reorganization by and among Newnan, the Holding Company and Interim
Newnan, FSB, an interim savings bank organized under the laws of the United
States of America ("Interim Newnan") dated as of December 14, 1995 (the "Plan
of Reorganization").
FORMATION OF HOLDING COMPANY
Newnan has 8,000,000 shares of common stock ("Newnan Stock"), $1.00 par
value, authorized, of which 1,443,116 shares are issued and outstanding. The
Holding Company has 8,000,000 shares of common stock ("Holding Company
Stock"), $1.00 par value, authorized, of which one share is issued and
outstanding solely for the purpose of consummating the Reorganization and the
Acquisition. The Holding Company formed a wholly owned subsidiary,
Newnan Holdings, Inc.
Southside Financial Group Inc.
June 26, 1996
Page 2
Interim Newnan, for the sole purpose of consummating the Reorganization.
Interim Newnan has 8,000,000 shares of common stock ("Interim Newnan Stock")
$1.00 par value, authorized, of which one share is issued and outstanding and
held of record by the Holding Company.
Pursuant to the Plan of Reorganization, Interim Newnan will merge with
and into Newnan, with Newnan surviving the merger. Shareholders of Newnan
shall receive, by virtue of the Reorganization, one share of Holding Company
Stock for each of their shares of Newnan Stock. Each Newnan shareholder
dissenting to the Reorganization will receive cash in exchange for such
shareholder's shares of Newnan Stock. The aggregate number of shares of
Newnan Stock dissenting from the Reorganization will not exceed ten percent
(10%) of the outstanding shares of Newnan Stock.
ACQUISITION OF SOUTHSIDE
In order to acquire Southside, the Holding Company has formed a wholly
owned subsidiary, Interim Citizens. Interim Citizens has 8,000,000 shares of
common stock ("Interim Citizens Stock") par value, authorized, of which one
share is issued and outstanding and held of record by the Holding Company.
Southside has 5,000,000 shares of common stock ("Southside Stock") $10.00 par
value, authorized, of which 369,607 shares are issued and outstanding.
Pursuant to the Acquisition Agreement, Interim Citizens will be merged
with and into Southside, with Southside surviving the merger. Shareholders
shall receive, by virtue of the Acquisition, $41.00 for each share of
Southside Stock owned (the "Merger Consideration"). Shareholders who "own or
control" (as described in Section 11.1 of the Acquisition Agreement) 5,000 or
more shares of Southside Stock may elect to receive the Merger Consideration
in the form of Holding Company Stock in accordance with the Acquisition
Agreement. The aggregate number of shares of Holding Company Stock which may
be issued in the Acquisition will not exceed 145,000. Each Southside
shareholder dissenting to the Acquisition will receive cash in exchange for
such shareholder's shares of Southside stock. The aggregate number of shares
of Southside Stock dissenting from the Acquisition shall not exceed ten
percent (10%) of the outstanding shares of Southside Stock.
DISCUSSION AND OPINION
BACKGROUND
The federal income tax consequences to the Southside shareholders as a
result of the Acquisition will vary, as discussed below, depending on whether
the Acquisition and the Reorganization are treated as part of a single
transaction or as separate distinct transactions. Applicable authority is
not sufficiently clear to allow us to render an opinion as to whether the
Acquisition and Reorganization will be treated as part of a single
transaction or as separate distinct transactions. As a result, the federal
income tax consequences of each of these two scenarios is discussed below.
Holdings, Inc.
Southside Financial Group Inc.
June 26, 1996
Page 3
SINGLE TRANSACTION
Assuming the Reorganization and the Acquisition will be viewed as part
of a single transaction, Interim Newnan and Interim Citizens, most likely,
will be ignored as transitory. SEE Rev. Rul. 67-448, 1967-2 C.B. 144. The
Newnan shareholders will be deemed to have contributed their Newnan Stock to
the Holding Company in exchange for Holding Company Stock, and the Southside
shareholders will be deemed to have contributed their Southside Stock to the
Holding Company in exchange for Holding Company Stock and cash, both as part
of a single transaction. After said exchange, former shareholders of Newnan
and Southside would own all of the outstanding stock of the Holding Company.
Accordingly, assuming the Reorganization and the Acquisition are viewed
as part of a single transaction, we are of the opinion that the Acquisition,
most likely, will qualify as part of an exchange pursuant to Section 351 of
the Internal Revenue Code of 1986, as amended (the "Code"). In such event,
the federal income tax consequences will be as follows:
(a) No gain or loss will be recognized for federal income tax
purposes by Southside shareholders upon the exchange of their shares of
Southside Stock for Holding Company Stock.
(b) The aggregate basis of the shares of Holding Company Stock to
be received by Southside shareholders will be the same as the aggregate
basis of Southside Stock surrendered in exchange therefor.
(c) The holding period of the Holding Company Stock to be received
by each Southside shareholder will include the period during which the
shares of Southside Stock surrendered in exchange therefor had been
held, provided such shares were held by such shareholder as a capital
asset at the effective time of the Acquisition.
(d) To the extent the Southside shareholders receive Merger
Consideration in the form of cash from Southside or receive cash from
Southside in lieu of fractional shares of Holding Company Stock,
Southside shareholders will be treated as having received such payments
as taxable distributions in redemption, as provided in Section 302(a) of
the Code, of shares of Southside Stock. Each affected Southside
shareholder will be required to consult such shareholder's own tax
advisor for the tax effect of such redemption (i.e., exchange treatment
with basis recovery or dividend) in light of such shareholder's
particular facts and circumstances.
(e) Southside shareholders who exercise their statutory right to
dissent and receive solely cash in exchange for their shares of
Southside Stock will be treated as having received such payments as
taxable distributions in redemption, as provided in Section 302(a) of
the Code, of shares of Southside Stock. Each affected Southside
shareholder will be required to consult such shareholder's own tax
advisor for the tax
Holdings, Inc.
Southside Financial Group Inc.
June 26, 1996
Page 4
effect of such redemption (i.e., exchange treatment with basis recovery
or dividend) in light of such shareholder's particular facts and
circumstances.
(f) To the extent the Southside shareholders receive Merger
Consideration in the form of cash from the Holding Company or receive
cash from the Holding Company in lieu of fractional shares of Holding
Company Stock, gain will be recognized on the lesser of the amount of
(1) such cash received or (2) the amount by which the fair market value
of the Merger Consideration received in the exchange exceeds the
shareholder's basis in Southside Stock. The character of such gain will
be capital gain provided the Southside Stock constitutes a capital asset
in the hands of the Southside shareholder. No loss may be recognized.
(g) No gain or loss will be recognized by the Holding Company or
Interim Citizens as a consequence of the Acquisition.
(h) No gain or loss will be recognized by Southside as a
consequence of the Acquisition, except for deferred gain or loss
recognized pursuant to Treasury Regulations issued under Section 1502 of
the Code.
SEPARATE TRANSACTIONS
Assuming the Reorganization and the Acquisition will be viewed as two
separate transactions, we are of the opinion that the Acquisition will not
qualify as a reorganization pursuant to Section 368(a) of the Code or as an
exchange pursuant to Section 351 of the Code. SEE, E.G., PLRs 8822062 and
8817079. In such event, the federal income taxes will be as follows:
(a) To the extent the Southside shareholders receive Merger
Consideration from the Holding Company in the form of cash or Holding
Company Stock, or cash from the Holding Company in lieu of fractional
shares of Holding Company Stock, gain or loss will be recognized for
federal income tax purposes by Southside shareholders equal to the
difference between the basis in their Southside Stock and the fair
market value of the Merger Consideration and other cash received in the
exchange. The character of such gain or loss will be capital gain or
loss provided the Southside Stock constitutes a capital asset in the
hands of the Southside shareholder.
(b) The aggregate basis of the shares of Holding Company Stock to
be received by Southside shareholders will be equal to the fair market
value of the Southside Stock exchanged for Holding Company Stock.
(c) To the extent the Southside shareholders receive Merger
Consideration in the form of cash from Southside or cash from Southside
in lieu of fractional shares of
Holdings, Inc.
Southside Financial Group Inc.
June 26, 1996
Page 5
Holding Company Stock, Southside shareholders will be treated as having
received such payments as taxable distributions in redemption, as
provided in Section 302(a) of the Code, of shares of Southside Stock.
Each affected Southside shareholder will be required to consult such
shareholder's own tax advisor for the tax effect of such redemption
(i.e., exchange treatment with basis recovery or dividend) in light of
such shareholder's particular facts and circumstances.
(d) Southside shareholders who exercise their statutory right to
dissent and receive solely cash in exchange for their shares of
Southside Stock will be treated as having received such payments as
taxable distributions in redemption, as provided in Section 302(a) of
the Code, of shares of Southside Stock. Each affected Southside
shareholder will be required to consult such shareholder's own tax
advisor for the tax effect of such redemption (i.e., exchange treatment
with basis recovery or dividend) in light of such shareholder's
particular facts and circumstances.
(e) No gain or loss will be recognized by the Holding Company or
Interim Citizens as a consequence of the Acquisition.
(f) No gain or loss will be recognized by Southside as a
consequence of the Acquisition, except for deferred gain or loss
recognized pursuant to Treasury Regulations issued under Section 1502 of
the Code.
For purposes of rendering the opinions, we have reviewed and relied upon
the Plan of Reorganization, the Acquisition Agreement, the certificate
attached hereto, and such other documents as we have considered appropriate.
In addition, we have assumed with your permission that the facts and
representations certified to us in writing by the Holding Company and
Southside which are set forth in the certificate attached hereto, apply as of
the effective time of the Acquisition. A copy of such certificate is
attached hereto and incorporated herein by reference. We have neither
investigated nor verified the accuracy of any of the facts which have been
certified to us, upon which this opinion is based.
This opinion is based also upon the Code, Treasury Regulations, Internal
Revenue Service rulings, judicial decisions, and other applicable authority,
all as in effect on the date of this opinion. The legal authorities on which
this opinion is based may be changed at any time. Any such changes may be
retroactively applied and could modify the opinions expressed herein. This
opinion does not address any tax considerations under foreign, state, or
local laws, or the tax considerations to certain Southside shareholders in
light of their particular circumstances, including persons who are not United
States persons, dealers in securities, tax-exempt entities, shareholders who
do not hold Southside Stock as "capital assets" within the meaning of Section
1221 of the Code, and shareholders who acquired their shares of Southside
Stock pursuant to the exercise of Southside options or otherwise as
compensation.
Holdings, Inc.
Southside Financial Group Inc.
June 26, 1996
Page 6
This opinion is being rendered solely to the parties to whom it is
addressed and may be relied upon by them and the shareholders of Southside.
This opinion may not be relied upon by any other party without the express
written permission of our Firm. We hereby consent to the reference to our
Firm under the heading "Legal Matters" in the Registration Statement on Form
S-4 filed by the Holding Company with the Securities and Exchange Commission
under the Securities Act of 1933 and to the inclusion of this opinion as an
exhibit thereto.
Very truly yours,
/s/ Powell, Goldstein, Frazer & Murphy
POWELL, GOLDSTEIN, FRAZER & MURPHY