Exhibit 8.1
[Letterhead of Sherman & Howard L.L.C.]
October 22, 1997
The Board of Directors
Cable Car Beverage Corporation
717 Seventeenth Street, Suite 1475
Denver, Colorado 80202
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the proposed merger of CCB Merger Corporation, a Delaware
corporation ("Mergerco"), with and into Cable Car Beverage Corporation
("Company"). Mergerco is a wholly-owned subsidiary of Triarc Companies, Inc., a
Delaware corporation ("Parent").
FACTS
-----
The terms of the proposed merger (the "Merger") are contained in the
Agreement and Plan of Merger dated June 24, 1997 (the "Plan of Merger"). Terms
not otherwise defined in this letter will have the meanings assigned to them in
the Plan of Merger. In preparing this opinion, you have directed us to assume
that (a) the Merger will be consummated in accordance with the terms, conditions
and other provisions of the Plan of Merger, and (b) all of the factual
information, descriptions, representations and assumptions set forth or referred
to in this letter, in the Officer's Certificates from Parent and the Company
dated October 21, 1997 (the "Officer's Certificates"), in the Shareholder's
Certificates from major Company shareholders dated October 21, 1997 (the
"Shareholder's Certificates") and in the Form S-4 Registration Statement of
Parent dated October 22, 1997 as filed with the Securities and Exchange
Commission ("Registration Statement"), and mailed to the Company's shareholders
in connection with the special meetings of shareholders to approve the Merger,
are accurate and complete and will be accurate and complete at the Effective
Time. We have not independently verified any factual matters relating to the
Merger in connection with or apart from our preparation of this opinion and,
accordingly, our
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opinion does not take into account any matters not set forth in this letter
which might have been disclosed by independent verification.
With your permission, we have also relied on the following additional
representations and assumptions:
1. The Merger will be a statutory merger under the applicable
provisions of the Delaware General Corporation Law, duly approved by any
required board of directors and shareholder action. The Merger will be carried
out in accordance with the Plan of Merger and as described in the Registration
Statement.
2. The Company has no issued or outstanding stock other than 8,948,324
shares of Company Common Stock. Except for options to acquire an aggregate
902,500 shares of Company Common Stock pursuant to Company Stock Options, no
options or warrants to purchase Company Stock, and no securities or other
instruments convertible into Company Common Stock, will be outstanding at the
Effective Time.
3. All shares of Parent Class A Common Stock into which shares of
Company Common Stock will be converted pursuant to the Merger will be voting
stock of Parent, will be newly issued or treasury shares, and will be issued (or
reissued) by Parent directly or through Mergerco to the exchanging Company
shareholders in the Merger.
4. The fair market value of the Parent Class A Common Stock and other
consideration received by each Company shareholder will be approximately equal
to the fair market value of Company Common Stock surrendered pursuant to the
Merger. Except for holders of no greater than 6% of Company Common Stock who
exercise dissenters' rights, no holder of Company Common Stock will receive, in
exchange for such stock and pursuant to any consideration other than Parent
Class A Common Stock and cash paid in lieu of a fractional share of Parent Class
A Common Stock. No fractional share of Parent Class A Common Stock will be
issued in the Merger.
5. There is no plan or intention by the shareholders of the Company who
own 5% or more of Company Common Stock, and to the best knowledge of the
management of the Company, there is no plan or intention on the part of the
remaining shareholders of the Company to sell, exchange or otherwise dispose of
a number of shares of Parent Class A Common Stock received in the Merger that
would reduce the ownership by the Company's shareholders of the Parent Class A
Common Stock received in the Merger to a number of shares having an aggregate
value, as of the Effective Time, of less than 50% of the value of all of the
formerly outstanding Company Common Stock as of the same date. For purposes of
this paragraph, shares of Company Common Stock surrendered by dissenters or
exchanged for cash in lieu of fractional shares of Parent Class A Common Stock
will be treated as outstanding
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Company Common Stock as of the Effective Time. Moreover, shares of Company
Common Stock and Parent Class A Common Stock held by the Company's shareholders
that are sold, redeemed, or disposed of prior or subsequent to the Merger and in
contemplation or as part of the Merger are considered for purposes of this
paragraph.
6. Immediately following the Merger, the Company will hold at least 90%
of the fair market value of its net assets and at least 70% of the fair market
value of its gross assets held immediately prior to the Merger, and at least 90%
of the fair market value of Mergerco's net assets and at least 70% of the fair
market value of Mergerco's gross assets held immediately prior to the Merger.
For purposes of this paragraph, amounts paid by the Company or Mergerco to
dissenters, amounts paid by the Company or Mergerco to shareholders who receive
cash or other property, amounts used by the Company or Mergerco to pay
reorganization expenses, and all redemptions and distributions (except for
regular, normal dividends) will be included as assets of the Company or
Mergerco, respectively, that are held immediately prior to the Merger.
7. Immediately prior to the Merger, Parent will be in direct control of
Mergerco within the meaning of Section 368(c) of the Code(1) (which provides
that control means the ownership of stock possessing at least 80% of the total
combined voting power of all classes of stock entitled to vote and at least 80%
of the total number of shares of all other classes of stock of the corporation).
8. The Company has no plan or intention to issue additional shares of
its stock that would result in Parent losing control of the Company within the
meaning of Section 368(c) of the Code.
9. In the Merger, shares of Company Common Stock representing control
of the Company within the meaning of Section 368(c) of the Code will be
exchanged solely for voting stock of Parent.
10. Following the Merger, the Company will not have outstanding any
options, warrants, convertible securities or any other type of right pursuant to
which any person could acquire stock in the Company that, if exercised or
converted, would affect Parent's acquisition or control of the Company within
the meaning of Section 368(c) of the Code.
11. Neither Parent nor any of its affiliates has any plan or intention
to reacquire any of the Parent Class A Common Stock to be issued in the Merger.
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(1) Unless otherwise specifically indicated, all references to "Section" are to
sections of the Internal Revenue Code of 1986, as amended (the "Code").
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Following the Merger, any acquisition of Parent Class A Common Stock pursuant to
any stock repurchase program of Parent will be directed to Parent shareholders
generally and will not be directed specifically to the Company shareholders who
receive Parent Class A Common Stock pursuant to the Merger.
12. Parent has no current plan or intention to liquidate the Company,
to merge the Company with and into another corporation (other than pursuant to
the Merger), to sell or otherwise dispose of any stock of the Company, or to
sell or otherwise dispose of any of the assets of the Company or Mergerco,
except for dispositions made in the ordinary course of business or transfers to
corporations controlled by Parent.
13. The Company has not disposed of assets in the two years prior to
the Merger representing more than 50% of its historical business assets. Parent
will continue at least a principal historic business line of the Company or use
at least a significant portion of the Company's historical assets in a business
of the Parent, in each case conducted or held by the Company at the time of the
Merger and in each case within the meaning of Treasury Regulation 1.368-1(d)
under Section 368 of the Code.
14. Mergerco will have no liabilities assumed by the Company pursuant
to the Merger, and will not transfer to the Company any assets subject to
liabilities, except in each case liabilities attributed to the Company by
operation of law by reason of its membership in a controlled or combined group.
15. Parent, the Company and the shareholders of the Company will pay
their respective expenses, if any, incurred in connection with the Merger.
16. There is no intercorporate indebtedness existing between Parent and
the Company, or between Mergerco and the Company, that was issued, acquired or
will be settled at a discount.
17. Parent does not own, nor has it owned during the past five years,
any shares of stock of the Company.
18. At the Effective Time, the fair market value of the assets of the
Company will exceed the sum of its liabilities, if any, to which the assets are
subject.
19. Neither Parent, Mergerco nor the Company is an investment company
within the meaning of Section 368(a)(2)(F) of the Code (which generally provides
that a corporation is an investment company if it is a regulated investment
company, a real estate investment trust, or a corporation 50% or more of the
value of whose total assets are stock and securities and 80% or more of the
value of whose assets are held for investment; with cash, cash equivalents,
government securities and certain other
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property described in Treasury Regulations excluded from assets, and with look-
through principles applying to subsidiaries).
20. The Company is not under the jurisdiction of a court in a title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
21. No dividends or distributions, other than regular or normal
dividends or distributions, will be made with respect to any stock of the
Company prior to the Merger. Other than such normal dividends or distributions,
the Company has not redeemed its stock, made any distribution with respect to
its stock or disposed of any assets in contemplation or as part of the Merger.
Following the Merger, no dividends or distributions will be made to the former
Company shareholders by Parent, other than regular or normal dividend
distributions with respect to their shares made with regard to all shares of
Parent Class A Common Stock.
22. None of the compensation received by any Company shareholder-
employee for services performed for the Company or any of its affiliates is or
will be separate consideration for, or allocable to, any of their shares of
Company Common Stock to be surrendered in the Merger. None of the Parent Class A
Common Stock received pursuant to the Merger by any shareholder-employee of the
Company in exchange for shares of Company Common Stock is or will be in exchange
for, or in consideration of, any employment, consulting or similar arrangement
between such shareholder-employee and Parent or any of its affiliates for
services rendered or to be rendered by such shareholder-employee. Any
compensation paid or to be paid to any Company shareholder who will be an
employee of or perform advisory services for Parent or any of its affiliates
after the Merger, and any amount paid to a Company shareholder as consideration
for agreements not to disclose confidential information about, or compete with,
Parent or any of its affiliates, will be in consideration of services or
agreements actually performed or to be performed, will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services or
agreements.
23. The payment of cash in lieu of issuing fractional shares of Parent
Class A Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Parent of issuing fractional shares of Parent Class A Common
Stock and does not represent separately bargained for consideration. In
addition, this cash payment will not be made pro rata to all Company
shareholders. The total cash consideration that will be paid in the Merger to
Company shareholders in lieu of issuing fractional shares of Parent Class A
Common Stock will not exceed 1% of the total consideration that will be issued
in the Merger to the Company shareholders in exchange for their shares of
Company Common Stock. The fractional share interests of each Company shareholder
will be aggregated, and no Company shareholder will receive cash in an
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amount equal to or greater than the value of one full share of Parent Class A
Common Stock.
24. The Company shareholders that will receive cash in lieu of
fractional shares of Parent Class A Common Stock will not have control of
Parent, for purposes of Section 302(b) of the Code, following the Merger.
25. The Merger is being effected for bona fide business reasons as
described in the Registration Statement.
OPINION
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Assuming that the Merger is consummated in accordance with the terms
and conditions set forth in the Plan of Merger and based on the facts set forth
or referred to in the Registration Statement, the Officer's Certificates, the
Shareholder's Certificates and this letter (an advance copy of which has been
provided to you), including all representations and assumptions in any such
documents, and subject to the qualifications and other matters set forth in this
letter, it is our opinion that for federal income tax purposes:
1. The Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code.
2. The Company will not recognize any taxable gain or loss as a result
of the Merger.
3. No gain or loss will be recognized by the shareholders of the
Company who exchange all of their Company Common Stock solely for Parent Class A
Common Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in Parent Class A Common Stock).
4. The aggregate tax basis of the Parent Class A Common Stock received
by the shareholders of the Company who, pursuant to the Merger, exchange all of
their Company Common Stock solely for Parent Class A Common Stock (plus cash in
lieu of a fractional share) will be the same as the aggregate tax basis of the
Company Common Stock surrendered in exchange (reduced by any amount allocable to
a fractional share interest in Parent Class A Common Stock for which cash is
received).
5. Any cash received by a holder of Company Common Stock in lieu of a
fractional share interest in Parent Class A Common Stock will be treated as
received in exchange for such fractional share. Such gain or loss generally will
be recognized for federal income tax purposes measured by the difference between
the amount of cash received and the portion of the shareholder's tax basis
allocable to such fractional
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share. The cash payment will be treated as a distribution in redemption of
Parent Class A Common Stock under Section 302 of the Code, so that a shareholder
of the Company who is an individual will be taxed at a maximum federal income
tax rate of 20% on such gain if the Company Common Stock has been held as a
capital asset for more than eighteen months prior to the Effective Time.
6. The holding period of the Parent Class A Common Stock received
pursuant to the Merger in exchange for Company Common Stock will include the
holding period of the Company Common Stock surrendered in exchange if such
Company Common Stock was a capital asset in the hands of the exchanging
shareholder at the Effective Time.
Our opinion is limited to the foregoing federal income tax consequences
of the Merger as a reorganization within the meaning of Section 368(a) of the
Code, which are the only matters as to which you have requested our opinion. We
do not address any other federal income tax consequences of the Merger or other
matters of federal law. Additionally, we have not considered matters (including
state or local tax consequences) arising under the laws of any jurisdiction
other than matters of federal law arising under the laws of the United States.
Our opinion is based on the understanding that the relevant facts are,
and will be as of the Effective Time, as set forth or referred to in this
letter. If this understanding is incorrect or incomplete in any respect, our
opinion could be affected.
Our opinion is also based on the Code, Treasury Regulations, case law,
and Internal Revenue Service rulings as they now exist. These authorities are
all subject to change and such change may be made with retroactive effect. We
can give no assurance that after any such change, our opinion would not be
different. Moreover, our opinion will not be binding on the Internal Revenue
Service or the courts.
We undertake no responsibility to update or supplement our opinion.
Only the Company and its shareholders may rely on this opinion, and only with
respect to the proposed Merger described above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the captions
"Summary--The Merger--Certain Federal Income Tax Consequences," "The Proposed
Merger and Related Matters--Certain Federal Income Tax Consequences" and "Legal
Matters" in the Registration Statement and the prospectus included therein.
Very truly yours,
SHERMAN & HOWARD L.L.C.