EXHIBIT 8
Opinion of Ice Miller Donadio & Ryan
July 18, 2000
Board of Directors
German American Bancorp
711 Main Street
Box 810
Jasper, IN 77546-3042
Board of Directors
Holland Bancorp, Inc.
405 N. Meridian
Box 8
Holland, IN 47541
Ladies and Gentlemen:
We have acted as counsel to German American Bancorp, an Indiana
corporation ("German American"), in connection with the proposed exchange of (i)
German American common shares for shares of Holland Bancorp, Inc. ("Holland"), a
Delaware corporation, and (ii) shares of The German American Bank, an Indiana
banking corporation ("GAB") for shares of The Holland National Bank, a national
banking association ("Holland Bank"), pursuant to the Agreement and Plan of
Reorganization by and among German American, GAB, Holland, and Holland Bank,
dated as of June 27, 2000 (the "Agreement"), the Addendum thereto (as defined
hereunder), and the documents executed and delivered in connection therewith
(collectively with the Agreement and the Addendum, the "Transaction Documents").
Terms which are not defined herein and are used with initial capitalization when
the rules of grammar would not otherwise so require and which are defined in the
Transaction Documents shall have the meanings assigned to such terms in the
Transaction Documents.
Under the terms of the Agreement, (A) Holland shall merge with and into
German American in a transaction in which all of the outstanding shares of
Holland stock (consisting of all of the outstanding shares of common stock of
Holland, par value $10.00 per share, that are outstanding immediately prior to
the Effective Time) will be converted into (i) shares of common stock, no par
value, $1.00 stated value, of German American ("German American Common"), and
(ii) rights to purchase one one-hundredth of a Series A Preferred Share of
German American under the terms and conditions of the Shareholder Rights Plan
dated April 27, 2000, at a ratio of 3.5 shares of German American Common and 3.5
such rights for each share of Holland Common (the "Holding Company Merger"); and
(B) immediately following the transactions set forth above, Holland Bank will
merge with and into GAB in a transaction in which all of the outstanding shares
of Holland Bank stock received by German American in the Holding Company Merger
(consisting of all of the outstanding shares ofcommon stock of Holland Bank, par
value $10.00 per share, which are outstanding immediately prior to the Effective
Time) will be canceled. Prior to the Closing Date, the parties will execute an
addendum to the Agreement (the "Addendum") to clarify that the shares of Holland
Bank common stock will be converted by operation of law into additional shares
of GAB common stock, following which the separate existence of Holland Bank
shall cease and GAB will remain a wholly owned subsidiary of German American
(the "Bank Merger").
Our opinions hereinafter set forth are given pursuant to Sections
6.01(i) and 6.02(g) of the Agreement.
Representations of the Facts
In connection with our opinions hereinafter set forth, the parties to
the Agreement have represented to us and advised us of the following facts:
Holland's capital structure consists of 500,000 authorized shares of
Holland Common, $10.00 par value, of which 268,544 are issued and outstanding.
Holland Bank's capital structure consists of 45,000 authorized shares of Holland
Bank Common, $10.00 par value, all of which are issued and outstanding and held
by Holland. As of the Closing Date there will be (i) no outstanding options or
warrants to purchase stock of either Holland or Holland Bank or (ii) outstanding
securities or other instruments convertible into stock of either Holland or
Holland Bank which constitute equity under general principles of federal tax
law. Except for outstanding stock options issued by Holland to employees of
Holland Bank with respect to the right to purchase 2,250 shares of Holland
Common, all of which will be exercised or will otherwise cease to exist prior to
the Closing Date, no options, warrants, securities, instruments or rights of any
kind with respect to either Holland or Holland Bank have been or will be (i)
issued in contemplation of either the Holding Company Merger or the Bank Merger
other than those set forth above in connection with the conversion of the
Holland stock, or (ii) canceled in contemplation of either the Holding Company
Merger or the Bank Merger.
On April 27, 2000, German American adopted a Shareholder Rights Plan as
a means of responding to unsolicited offers to acquire the corporation (the
"Rights Plan"), pursuant to which the holders of German American Common are
generally entitled to purchase additional shares of either German American
Common (and in certain circumstances, German American preferred stock or similar
securities) at substantially less than fair market value, or, in certain
circumstances, stock in the acquiring company (the "Rights"). The Rights are not
represented by a certificate other than the underlying certificate representing
shares of German American Common and until they become exercisable, the Rights
cannot be transferred separately from the underlying shares of German American
Common. At the time the Rights Plan was entered into, the likelihood that the
Rights would, at any time, be exercised was both remote and speculative.
There have been and will be no distributions to any of the Holland
shareholders or the Holland Bank shareholders with respect to their stock of
either Holland or Holland Bank and no stock of either Holland or Holland Bank
has been or will be sold, redeemed or otherwise disposed of in contemplation of
either the Holding Company Merger or the Bank Merger.
On the Closing Date, all of the outstanding stock of Holland will be
exchanged for shares of German American Common as determined in accordance with
the Agreement, rounded to the nearest whole share. Any fraction of a German
American Common share resulting from the calculations provided in the Agreement
shall be paid in cash as defined in the Agreement. Other than German American
Common and cash paid in lieu of the issuance of fractional shares of German
American Common, there will be no cash or other property exchanged.
Also on the Closing Date, and subsequent to the Holding Company Merger,
all of the outstanding stock of Holland Bank will be exchanged for additional
shares of GAB common stock as determined in accordance with the Agreement and
Addendum. Other than the shares of GAB common stock, there will be no cash or
other property exchanged in the Bank Merger.
Scope of Investigation
In connection with our opinions hereinafter set forth, we have
investigated such questions of law as we have deemed necessary or appropriate
for purposes of these opinions. We have also examined the following documents:
6. The Transaction Documents;
7. The Certificate executed by German American and GAB of even date
herewith and delivered by German American and GAB to us (the "German
American Certificate"); and
8. The Certificate executed by Holland and Holland Bank of even date
herewith and delivered by Holland and Holland Bank to us (the "Holland
Certificate").
As to questions of fact material to our opinions, we have relied
exclusively, without independent investigation, upon the statements and
representations of German American, GAB, Holland, and Holland Bank, and our
opinions are limited by the facts and circumstances as represented to and
understood by us.
Additional Assumptions and Representations
For purposes of our opinions hereinafter set forth, we have assumed and
you have represented that: (l) all of the terms of both the Holding Company
Merger and the Bank Merger are contained in the Transaction Documents and the
Holding Company Merger and the Bank Merger will be consummated in accordance
with the terms, conditions and other provisions of the Transaction Documents;
and (2) all of the factual information, descriptions, representations, and
assumptions set forth under "Representations of the Facts" above, the
Transaction Documents and the certificates identified above are accurate and
complete in all respects as of the Closing Date.
In our examinations, we have assumed the genuineness of all documents
submitted to us as originals and the conformity with the original documents of
all documents submitted to us as copies. In addition, we have assumed: (l) the
genuineness of all signatures; (2) the legal capacity of all natural persons and
the power and authority of all parties to execute and deliver such documents;
(3) the due authorization, execution and delivery of the documents by all
parties thereto; and (4) that the documents are legal, valid and binding as
against all parties. We have also assumed that the certificates identified above
were executed and delivered in good faith by German American, GAB, Holland and
Holland Bank.
With respect to the Holding Company Merger, you have represented and we
have assumed the following with your permission without independent
investigation:
1. German American's and Holland's principal reasons for participating in
the Holding Company Merger are bona fide business reasons not related
to taxes, including: (i) to obtain greater financial and managerial
strength for future growth and to achieve economies of scale and other
operational benefits; and (ii) to allow the bank and the bank holding
company to compete more effectively with other banking organizations
and to enable them to provide new and broader services to the former
customers of each bank.
2. The fair market value of the German American Common and other
consideration received by each holder of Holland stock will be
approximately equal to the fair market value of the Holland stock
surrendered in exchange therefor.
3. There is no plan or intention by German American or any persons or
entities related to German American within the meaning of Treasury
Regulationss.1.368-1(e)(3) to reacquire from any Holland shareholder
any German American stock issued in the reorganization. Furthermore,
there is no plan or intention by German American or persons or
entities related to German American within the meaning of Treasury
Regulationss.1.368-1(e)(3) to acquire from any Holland shareholder any
shares of Holland stock prior to the reorganization for consideration
other than German American common stock. No third party is acting as
an agent for or on behalf of German American to purchase Holland
stock, nor is German American a party to any agreement with a third
party to purchase Holland stock.
4. During the five-year period ending on the date of the Holding Company
Merger, neither German American nor any person related to German
American (as defined in Treasury Regulation ss. 1.368-1(e)(3)) has
acquired or will acquire directly or through any transaction,
agreement or arrangement with any other person, Holland stock with
consideration other than voting stock of German American.
5. Following the transaction, German American will continue the historic
business of Holland or use a significant portion of Holland's historic
business assets in a business.
6. German American, Holland and their respective shareholders will pay
their respective expenses, if any, incurred in connection with the
transaction.
7. There is no intercorporate indebtedness existing between German
American and Holland that was issued, acquired, or will be settled at
a discount.
8. Neither German American nor Holland is an investment company as
defined in Code Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
9. On the date of the transaction, the fair market value of the assets of
Holland transferred to German American will equal or exceed the sum of
the liabilities assumed by German American plus the amount of
liabilities, if any, to which the transferred assets are subject.
10. The payment of cash in lieu of fractional shares of German American
stock is solely for the purpose of avoiding the expense and
inconvenience to German American 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 Holland
shareholders instead of issuing fractional shares of German American
stock will not exceed one percent of the total consideration that will
be issued in the transaction to the Holland shareholders in exchange
for their shares of Holland stock. The fractional share interests of
each Holland shareholder will be aggregated, and no Holland
shareholder will receive cash in an amount equal to or greater than
the value of one full share of German American stock.
11. None of the compensation received by any shareholder-employee of
Holland will be separate consideration for, or allocable to, any of
their shares of Holland stock; none of the shares of German American
stock received by any shareholder-employee will be separate
consideration for, or allocable to, any employment agreement; and the
compensation paid to any shareholder-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.
12. The Rights Plan was adopted as a means of responding to unsolicited
offers to acquire German American. At the time the Rights Plan was
adopted, the likelihood that the Rights would be exercised was
considered both remote and speculative. As of the Closing Date, no
event will have occurred that would make the Rights exercisable or
which will have changed the expectation regarding exercise.
13. German American will pay or assume only those expenses of Holland that
are solely and directly related to the transaction in accordance with
the guidelines established in Rev. Rul. 73-53, 1973-1 C.B. 187.
14. Prior to and in connection with the Holding Company Merger, (i)
Holland has no plan or intention to redeem any shares of Holland stock
held by Holland shareholders or to make any distribution with respect
to any shares of Holland stock held by Holland shareholders within the
meaning of Temporary Treasury Regulationss.1.368-1T(e)(1)(ii)(A); (ii)
Holland has not redeemed (and will not redeem) any Holland stock and
it has not made (and will not make) any extraordinary distributions,
within the meaning of Temporary Treasury
Regulationss.1.368-1T(e)(1)(ii)(A), with respect thereto; and (iii) no
person that is related to Holland, within the meaning of Temporary
Treasury Regulationss.1.368-1T(e)(2)(ii), has acquired (or will
acquire) Holland stock from any holder thereof.
15. The liabilities of Holland assumed by German American and the
liabilities to which the transferred assets of Holland are subject
were incurred by Holland in the ordinary course of its business.
16. Holland is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Code Section 368(a)(3)(A).
17. The Holding Company Merger will qualify as a statutory merger under
applicable state and federal law.
18. There are no excess loss accounts, deferred intercompany transactions,
or other items of income, gain, loss, deduction or credit of either
Holland or Holland Bank under the federal consolidated return
regulations or otherwise that must be recognized or may be triggered
as a result of the Holding Company Merger.
19. The Transaction Documents represent the full and complete agreement
among German American, GAB, Holland and Holland Bank regarding the
Holding Company Merger and the Bank Merger and there are no other
written or oral agreements among the parties other than those
expressly referred to in the Transaction Documents.
With respect to the Bank Merger, you have represented and we have
assumed the following with your permission without independent investigation:
1. GAB's and Holland Bank's principal reasons for participating in the
Bank Merger are bona fide business reasons not related to taxes,
including: (i) to obtain greater financial and managerial strength for
future growth and to achieve economies of scale and other operational
benefits; and (ii) to allow the bank and the bank holding company to
compete more effectively with other banking organizations and to
enable them to provide new and broader services to former customers of
each bank.
2. The fair market value of the GAB stock and other consideration
received by each Holland Bank shareholder will be approximately equal
to the fair market value of the Holland Bank stock surrendered in
exchange therefor.
3. There is no plan or intention by GAB or any persons or entities
related to GAB within the meaning of Treasury
Regulationss.1.368-1(e)(3) to reacquire from any Holland Bank
shareholder any GAB stock issued in the reorganization. Furthermore,
there is no plan or intention by GAB or persons or entities related to
GAB within the meaning of Treasury Regulationss.1.368-1(e)(3) to
acquire from any Holland Bank shareholder any shares of Holland Bank
stock prior to the reorganization for consideration other than GAB
common stock. No third party is acting as an agent for or on behalf of
GAB to purchase Holland Bank stock, nor is GAB a party to any
agreement with a third party to purchase Holland Bank stock.
4. During the five-year period ending on the date of the Bank Merger,
neither GAB nor any person related to GAB (as defined in Treasury
Regulation ss. 1.368-1(e)(3)) has acquired or will acquire directly or
through any transaction, agreement or arrangement with any other
person, Holland Bank stock with consideration other than voting stock
of GAB.
5. Following the transactions, GAB will continue the historic business of
Holland Bank or use a significant portion of Holland Bank's historic
business assets in a business.
6. On the date of the transaction, the fair market value of the assets of
Holland Bank transferred to GAB will equal or exceed the sum of the
liabilities assumed by GAB plus the amount of liabilities, if any, to
which the transferred assets are subject.
7. GAB, Holland Bank and their respective shareholders will pay their
respective expenses, if any, incurred in connection with the
transaction.
8. There is no intercorporate indebtedness existing between GAB and
Holland Bank that was issued, acquired, or will be settled at a
discount.
9. Neither GAB nor Holland Bank is an investment company as defined in
Code Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
10. There will be no payment of cash in lieu of fractional shares of GAB
stock.
11. None of the compensation received by any shareholder-employees of
Holland Bank will be separate consideration for, or allocable to, any
of their shares of Holland Bank stock; none of the shares of GAB will
be separate consideration for, or allocable to, any employment
agreement; and the compensation paid to any shareholder-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.
12. GAB will pay or assume only those expenses of Holland Bank that are
solely and directly related to the transaction in accordance with the
guidelines established in Rev. Rul. 73-54, 1973-1 C.B. 187.
13. Prior to and in connection with the Bank Merger, (i) Holland Bank has
no plan or intention to redeem any shares of Holland Bank stock held
by Holland Bank shareholders or to make any distribution with respect
to any shares of Holland Bank stock held by Holland Bank shareholders
within the meaning of Temporary Treasury Regulationss
.1.368-1T(e)(1)(ii)(A); (ii) Holland Bank has not redeemed (and will
not redeem) any Holland Bank stock and it has not made (and will not
make) any extraordinary distributions, within the meaning of Temporary
Treasury Regulation ss.1.368-1T(e)(1)(ii)(A), with respect thereto;
and (iii) no person that is related to Holland Bank, within the
meaning of Temporary Treasury Regulationss.1.368-1T(e)(2)(ii), has
acquired (or will acquire) Holland Bank stock from any holder thereof.
14. The liabilities of Holland Bank assumed by GAB and the liabilities to
which the transferred assets of Holland Bank are subject were incurred
by Holland Bank in the ordinary course of its business.
15. Holland Bank is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Code Section 368(a)(3)(A).
16. The Bank Merger will qualify as a statutory merger under applicable
state and federal law.
17. There are no excess loss accounts, deferred intercompany transactions,
or other items of income, gain, loss, deduction or credit of either
Holland or Holland Bank under the federal consolidated return
regulations or otherwise that must be recognized or may be triggered
as a result of the Bank Merger.
18. The Transaction Documents represent the full and complete agreement
among German American, GAB, Holland and Holland Bank regarding the
Holding Company Merger and the Bank Merger and there are no other
written or oral agreements among the parties other than those
expressly referred to in the Transaction Documents.
Opinion
Based upon and subject to the foregoing, and subject to the
qualifications, limitations and assumptions set forth in this letter, we are of
the opinion that:
1. The Holding Company Merger will constitute a reorganization within the
meaning of Code Sections 368(a)(1)(A) in which German American and
Holland will each be a "party to a reorganization" within the meaning
of Code Section 368(b).
2. No gain or loss will be recognized by the holders of shares of Holland
Common pursuant to the exchange of Holland Common solely for German
American Common. Code Section 356(a).
3. The basis of the shares of German American Common received by the
shareholders of Holland will be the same as the basis of shares of
Holland Common exchanged therefor. Code Section 358(a)(1).
4. The holding period with respect to the shares of German American
Common received by the shareholders of Holland will include the
holding period of the shares of Holland Common exchanged therefor
provided such shares were held as capital assets as of the Effective
Time. Code Section 1223(1).
The opinions set forth in this letter are limited to the foregoing
United States federal income tax consequences of the Holding Company Merger and
are based solely on, and are limited to, the federal income tax laws of the
United States of America. We express no opinion as to any other federal laws, or
any foreign, state or local laws, and we express no opinion as to any federal,
state or other tax consequences of any other aspects of the Holding Company
Merger.
The opinions expressed in this letter speak as to the documents, facts
and the law in existence as of the date hereof and at no time subsequent hereto.
No opinion is expressed in this letter concerning the tax treatment of the
Holding Company Merger under other provisions of the Code and regulations
adopted thereunder or under foreign, state or local law, or as to the tax
treatment of any conditions existing at the time of, or the effects resulting
from, the Holding Company Merger that are not specifically covered above.
We assume no obligation to update our opinions for any deletions,
additions or modifications to any laws applicable to the Holding Company Merger
subsequent to the date hereof. The opinions expressed herein are matters of
professional judgment and are not a guarantee of results.
The opinions expressed in this letter are solely for the benefit of the
addressees hereof in connection with the transactions provided for in, or
contemplated by, the Transaction Documents. This letter may be filed with the
United States Securities and Exchange Commission as Exhibit 8 of German
American's Registration Statement on Form S-4 relating to the offer and sale of
German American common stock pursuant to the Holding Company Merger, and we
consent to that filing and to German American's references to our firm and the
discussions of our opinions included in the prospectus/proxy statement that is
part of the Registration Statement.
The opinions expressed in this letter may not be used for any other
purpose or otherwise distributed or relied upon by any person. Except for
reproductions for inclusion in transcripts of the documentation relating to the
Transaction Documents and the filing of, and reference to, these opinions made
in connection with the Registration Statement, these opinions may not be quoted
or reproduced, in whole or in part, in any other document without our prior
written consent.
Very truly yours,
/s/ ICE MILLER DONADIO & RYAN