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EXHIBIT 8.2
[FULBRIGHT & JAWORSKI LLP LETTERHEAD]
April 3, 2001
InterContinental Life Corporation
6500 Red River Blvd., Building One
Austin, Texas 78730
Gentlemen:
You have requested our opinion concerning certain United States federal
income tax consequences of the proposed merger (the "Merger") of ILCO
Acquisition Company, a Texas corporation ("Sub") and a direct, wholly-owned
subsidiary of Financial Industries Corporation, a Texas corporation ("FIC"),
with and into InterContinental Life Corporation, a Texas corporation ("ILCO").
Pursuant to the Merger, FIC will acquire all of the stock of ILCO solely in
exchange for voting stock of FIC.
Descriptions of the parties and of the Merger and related transactions
are set forth in (i) the Agreement and Plan of Merger by and among FIC, Sub and
ILCO, dated as of January 17, 2001 (the "Merger Agreement"), and (ii) the Joint
Proxy Statement/Prospectus included as part of the Registration Statement on
Form S-4 filed with the Securities and Exchange Commission on February 1, 2001
(collectively, and with all amendments thereto, the "Registration Statement").
ILCO and FIC have represented to us that the information contained in
the Agreement and the Registration Statement is accurate and complete. In
addition, we assume such information will be accurate and complete as of the
effective time of the Merger. In connection with this opinion we have reviewed
the Agreement and the Registration Statement, and ILCO and FIC have represented
to us that the Merger will be carried out in accordance with the terms of the
Agreement.
SUMMARY OF TRANSACTIONS
Pursuant to the Merger Agreement, at the effective time Sub will be
merged with and into ILCO pursuant to the provisions of and with the effect
provided in the Texas Business Corporation Act. ILCO will be the surviving
corporation resulting from the Merger. In the Merger, ILCO will succeed to all
of the assets of Sub.
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April 3, 2001
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At the effective time of the Merger, the issued and outstanding capital
stock of ILCO will consist solely of the shares of common stock, $0.22 par value
("ILCO Common Stock"). In the Merger, each share of ILCO Common Stock not owned
by FIC will be converted into one and one-tenth (1.10) shares of voting common
stock, $0.20 par value, of FIC ("FIC Common Stock") as provided in the Merger
Agreement. Each share of ILCO Common Stock owned by FIC prior to the Merger will
be canceled and retired.
Pursuant to the Merger Agreement, cash will be paid in lieu of any
factional shares of FIC Common Stock. Apart from the cash paid in lieu of
fractional shares, the consideration paid to ILCO shareholders for their ILCO
Stock will consist solely of FIC Common Stock.
The Agreement provides that the parties intend the Merger to constitute
a reorganization within the meaning of section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). Further ILCO and FIC have made certain
representations to us in certificates dated the same date as this opinion.
Copies of those certificates are attached hereto as Exhibit A.
OPINION
Based upon the facts and statements set forth above, our examination
and review of the documents referred to above and subject to the assumption and
qualifications set forth herein, it is our opinion that for United States
federal income tax purposes:
1. The Merger will constitute a reorganization within the meaning
of section 368(a) of the Code;
2. FIC, Sub and ILCO will each be a party to the reorganization
within the meaning of section 368(b) of the Code; and
3. No gain or loss will be recognized by the shareholders of ILCO
upon the receipt of FIC Common Stock in exchange for ILCO
Common Stock pursuant to the Merger, except with respect to
any cash received in lieu of fractional shares.
LIMITATIONS AND QUALIFICATIONS
This opinion is based on statutes, regulations promulgated thereunder,
and governmental rulings and court decisions published to date, all of which are
subject to change by the Congress, governmental agencies, and the courts. Our
opinion does not address all tax consequences applicable to the Merger and is
limited to the conclusions set forth above, and no other opinions are expressed
or implied. Moreover, tax consequences which are different from or in addition
to those described herein may apply to ILCO shareholders who are subject to
special treatment under the United States federal income tax laws, including,
without limitation, those referred to in the first paragraph under "The
Merger-Material U.S. Federal Income Tax Consequences of the Merger" of the Joint
Proxy
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Statement/Prospectus. Further, our opinion is limited to the United States
federal income tax consequences of the transactions described herein. Thus, for
example, no opinion is expressed concerning any state, local, or foreign tax
consequences of such transactions.
The parties have not requested or received any advance ruling from the
Internal Revenue Service (the "Service") pertaining to the transactions
described herein. Our opinion is not binding upon the Service or any court.
Accordingly, the Service may challenge some or all of the conclusions set forth
above in the audit of an ILCO shareholder or of one or more of the parties to
the Merger. If such challenge occurs, it may be necessary to resort to
administrative proceedings or litigation in an effort to sustain such
conclusions, and there can be no assurance that such conclusions ultimately will
be sustained.
The opinions set forth above are based in part upon facts and
representations concerning the transactions contained in the Agreements and upon
the additional representations set forth in the certificates of FIC and ILCO. We
have informed the parties that any consideration paid for ILCO Common Stock
other than FIC Common Stock and cash in lieu of fractional shares could cause
the exchange of ILCO Common Stock for FIC Common Stock to be taxable and, in
addition to the other factual representations, have been assured by FIC and ILCO
that no consideration other than FIC Common Stock and cash in lieu of fractional
shares will be exchanged for shares of ILCO Common Stock. In addition, we have
been assured by FIC that neither FIC nor any person who owns more than 4.5% of
FIC has determined to sell FIC or to enter into a transaction that would result
in the sale, exchange or other disposition of 75% or more of the FIC Common
Stock outstanding after the Merger. We have not made an independent
investigation to determine the accuracy or completeness of such facts and
representations, and our opinion is conditioned on the accuracy and completeness
of such facts and representations and upon the assumption that they will be
accurate and complete as of the effective time of the Merger.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to us under the captions "The
Merger-Material U.S. Federal Income Tax Consequences of the Merger" and "Legal
Matters" in the Proxy Statement/Prospectus forming a part of the Registration
Statement. In giving this consent, however, we do not hereby admit that we are
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within the category of persons whose consent is required under section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ FULBRIGHT & JAWORSKI L.L.P.
Fulbright & Jaworski L.L.P.
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EXHIBIT A
INTERCONTINENTAL LIFE CORPORATION
CERTIFICATE
In connection with the tax opinions to be delivered pursuant
to Sections 7.2(c) and 7.3(c) of the Agreement and Plan of Merger dated as of
January 17, 2001 (the "Merger Agreement"), among Financial Industries
Corporation ("FIC"), a Texas corporation, ILCO Acquisition Company ("Sub"), a
Texas corporation and a direct wholly-owned subsidiary of FIC, and
InterContinental Life Corporation ("ILCO"), a Texas corporation, whereby Sub
will merge with and into ILCO (the "Merger"), ILCO hereby certifies the
following (any capitalized term used but not defined herein having the meaning
given to such term in the Merger Agreement):
1. The terms of the Merger Agreement were determined through
arm's-length negotiations. In that connection, the exchange
ratio of common stock of FIC ("FIC Common Stock") to be issued
in the Merger in exchange for common stock of ILCO ("ILCO
Common Stock") was established by the investment advisors to
ILCO to be at least equal to the fair market value of a share
of ILCO Common Stock at the time the terms of the Merger
Agreement were agreed to.
2. Prior to and in connection with the Merger, no ILCO Common
Stock has been (i) repurchased or redeemed by ILCO or (ii) the
subject of any distribution by ILCO. Within the last twelve
(12) months, up until Merger discussions between the two
companies began, ILCO repurchased in the market, pursuant to
its share repurchase program, approximately 8.5% of ILCO
Common Stock solely out of its own funds; no funds were
supplied for that purpose, directly or indirectly, by FIC, nor
did (or will) FIC directly or indirectly reimburse ILCO for
any such repurchases.
3. Currently, two subsidiaries of ILCO own 708,620 shares of ILCO
Common Stock, representing approximately 8.3% of ILCO, that
they have owned for at least nine (9) years.
4. There is no plan or intention by any shareholder of ILCO who
owns 5% or more of the ILCO Common Stock, and to the best of
the knowledge of the management of ILCO, there is no plan or
intention on the part of the remaining shareholders of ILCO,
to sell, exchange or otherwise dispose of
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FIC Common Stock to be received in the Merger by such holder
of ILCO Common Stock directly or indirectly to FIC or to a
person related to FIC (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)) for consideration other than
FIC Common Stock.
5. In connection with the Merger and except, possibly, for cash
in lieu of fractional share interests in FIC Common Stock, (a)
shares of ILCO Common Stock will be exchanged solely for FIC
Common Stock and (b) no shares of ILCO Common Stock will be
exchanged for cash or other property originating with FIC or
any person related to FIC (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)). Further, no liabilities of
ILCO or of the shareholders of ILCO will be assumed by FIC,
nor to the best of the knowledge of the management of ILCO
will any ILCO Common Stock be subject to any liabilities.
6. The Paying Agent either will sell in the market FIC fractional
share interests on behalf of the former holders of ILCO Common
Stock or will receive from FIC cash in an amount sufficient to
satisfy the obligations of the Paying Agent to make cash
payments to holders of FIC fractional shares. In this
connection, should cash be paid by FIC to the Paying Agent in
lieu of fractional shares of FIC Common Stock, it would be
solely for the purpose of avoiding the expense and
inconvenience to FIC of issuing fractional shares and would
not represent separately bargained-for consideration. The
total cash consideration that will be paid in the Merger to
ILCO shareholders instead of issuing fractional shares of FIC
Common Stock is not expected to exceed one percent of the
total consideration that will be issued to the ILCO
shareholders in exchange for their ILCO Common Stock.
7. No holder of ILCO Common Stock has dissenters' rights with
respect to the Merger under applicable laws.
8. ILCO has no outstanding equity interests other than as
described in Section 2.2 of the Merger Agreement and, in
particular, has no outstanding stock other than ILCO Common
Stock. At the Effective Time and following the Merger, ILCO
will not have outstanding any warrants, options, convertible
securities, or any other type of right pursuant to which any
person could acquire stock in ILCO that, if exercised or
converted, would affect FIC's acquisition or retention of
"control" of ILCO within the meaning of Section 368(c) of the
Internal Revenue Code of 1986, as amended (the "Code").
9. ILCO has no plan or intention to issue additional shares of
its stock that would result in FIC losing "control" of ILCO
within the meaning of Section 368(c) of the Code.
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10. All outstanding options, warrants or rights to acquire shares
of ILCO Common Stock were issued with an exercise price not
less than fair market value at the time of issue.
11. ILCO and its shareholders will pay their respective expenses,
if any, incurred in connection with the Merger.
12. ILCO is not an investment company as defined in Section
368(a)(2)(F)(iii) and (iv) of the Code.
13. ILCO 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.
14. There is no intercorporate indebtedness existing between FIC
and ILCO or between Sub and ILCO that was issued, acquired or
will be settled at a discount.
15. In connection with the Merger, ILCO has not sold, transferred
or otherwise disposed of any of its assets as would prevent
ILCO or members of FIC's qualified group (within the meaning
of Treasury Regulation 1.368-1(d)(4)(ii)) from causing ILCO
after the Merger to continue the historic business of ILCO or
to use a significant portion of ILCO's historic business
assets in a business.
16. On the date of the Merger, the fair market value of the assets
of ILCO will exceed the sum of its liabilities, plus the
amount of liabilities, if any, to which its assets are
subject. All such liabilities were incurred in the ordinary
course of business.
17. None of the compensation to be received by any
shareholder-employee of ILCO in the Merger will be separate
consideration for, or allocable to, any of their shares of
ILCO Common Stock; none of the FIC Common Stock to be received
by any shareholder-employee of the ILCO will be separate
consideration for, or allocable to, any past or future
services, any employment contract, or any consulting or
noncompete agreement.
18. The Merger is being effected for bona fide business reasons,
as described in the Joint Proxy Statement/Prospectus.
19. The Merger Agreement (including all exhibits and attachments
thereto) represents the full and complete agreement between
FIC and ILCO regarding the Merger, and there are no other
written or oral agreements regarding the Merger. The Merger
will be consummated pursuant to the terms of the Merger
Agreement and none of the material terms and conditions
thereof have been or will be waived or modified.
20. The information relating to the Merger Agreement and all
related transactions (including, without limitation to, all
representations,
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warranties, covenants, and undertakings) set forth in the
Joint Proxy Statement/Prospectus, insofar as such information
relates to ILCO and/or its subsidiaries, or their plans and
intentions, are true, correct and complete in all material
respects.
21. The undersigned is a duly elected and authorized officer of
ILCO, is familiar with the transactions contemplated by, and
the terms and provisions of, the Merger Agreement, has
personal knowledge of the certifications made herein and is
authorized to make these certifications on behalf of ILCO.
ILCO understands and agrees that the certifications contained
herein will be relied upon by Fulbright & Jaworski, L.L.P. and
Weil, Gotshal & Manges LLP in delivering the tax opinions
described in Section 7.2(c) and 7.3(c) of the Merger
Agreement, will be assumed by them to be accurate without
further inquiry on their part, and, if inaccurate, may
adversely affect their opinions. While the certifications in
this Certificate are made as of the date hereof, they are
intended to have continuing validity through the Effective
Time. If, after executing this Certificate, ILCO has reason to
believe that any of the certifications made herein are untrue,
incorrect or incomplete, it will promptly and timely inform
each of said law firms.
IN WITNESS WHEREOF, ILCO has executed this Certificate on this
3rd day of April, 2001.
InterContinental Life Corporation
By: /s/ ROY F. MITTE
----------------------------------------
Name: Roy F. Mitte
Title: President
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FINANCIAL INDUSTRIES CORPORATION
CERTIFICATE
In connection with the tax opinions to be delivered pursuant
to Sections 7.2(c) and 7.3(c) of the Agreement and Plan of Merger dated as of
January 17, 2001 (the "Merger Agreement"), among Financial Industries
Corporation ("FIC"), a Texas corporation, ILCO Acquisition Company ("Sub"), a
Texas corporation and a direct wholly-owned subsidiary of FIC, and
InterContinental Life Corporation ("ILCO"), a Texas corporation, whereby Sub
will merge with and into ILCO (the "Merger"), FIC hereby certifies, on behalf of
FIC and Sub the following (any capitalized term used but not defined herein
having the meaning given to such term in the Merger Agreement):
1. The terms of the Merger Agreement were determined through
arm's-length negotiations. In that connection, the exchange
ratio of common stock of FIC ("FIC Common Stock") to be issued
in the Merger in exchange for common stock of ILCO ("ILCO
Common Stock") was established by the investment advisors to
ILCO to be at least equal to the fair market value of a share
of ILCO Common Stock at the time the terms of the Merger
Agreement were agreed to.
2. Prior to and in connection with the Merger, no ILCO Common
Stock has been acquired by FIC or any person related to FIC
(within the meaning of Treasury Regulation Section
1.368-1(e)(3)) for consideration other than FIC Common Stock.
3. FIC currently owns approximately 46.5% of ILCO that it has
owned for at least fourteen (14) years. In addition, a
wholly-owned subsidiary of FIC owns approximately 1.5% of ILCO
that it has owned for at least eight (8) years. Other than as
set forth in this paragraph (3), neither FIC nor any person
related to FIC (within the meaning of Treasury Regulations
Section 1.368-1(e)(3)) owns, directly or indirectly, any stock
of ILCO, or has any plan or intention to acquire any stock of
ILCO other than as provided in the Merger Agreement.
4. As of the date hereof, FIC does not hold any warrants or
options to acquire ILCO Common Stock.
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5. In connection with the Merger and except, possibly, for cash
in lieu of fractional share interests in FIC Common Stock, (a)
shares of ILCO Common Stock will be exchanged solely for FIC
Common Stock and (b) no shares of ILCO Common Stock will be
exchanged for cash or other property originating with FIC or
any person related to FIC (within the meaning of Treasury
Regulation Section 1.368-1(e)(3)). Further, no liabilities of
ILCO or of the shareholders of ILCO will be assumed by FIC,
nor to the best knowledge of the management of FIC will any
ILCO Common Stock be subject to any liabilities.
6. The only class of outstanding equity of FIC is FIC Common
Stock, which is voting stock that includes the right to vote
for the board of directors of FIC.
7. The Paying Agent either will sell in the market FIC fractional
share interests on behalf of the former owners of ILCO Common
Stock or will receive from FIC cash of an amount sufficient to
satisfy the obligations of the Paying Agent to make cash
payments to holders of FIC fractional shares. In this
connection, should cash be paid by FIC to the Paying Agent in
lieu of fractional shares of FIC Common Stock, it would be
solely for the purpose of avoiding the expense and
inconvenience to FIC of issuing fractional shares and would
not represent separately bargained-for consideration. The
total cash consideration that will be paid in the Merger to
ILCO shareholders instead of issuing fractional shares of FIC
Common Stock is not expected to exceed one percent of the
total consideration that will be issued to the ILCO
shareholders in exchange for their ILCO Common Stock.
8. Neither FIC nor any person related to FIC (within the meaning
of Treasury Regulation Section 1.368-1(e)(3)) nor any person
acting as an agent or intermediary for any of them has any
plan or intention to purchase, exchange, redeem or otherwise
acquire (directly or indirectly) any FIC Common Stock issued
to holders of ILCO Common Stock in the Merger. After February
1, 2001, FIC received unsolicited verbal indications of
interest from a few companies that may be interested in
acquiring FIC subsequent to the completion of the Merger,
without stating any price ranges or other material terms. FIC
then retained a financial advisor to explore the possibility
of a post-Merger sale of FIC either with one of these
companies or with another company that may have a similar
interest. Currently, several third parties, with FIC's
cooperation, are doing due diligence on FIC. These steps are
being undertaken wholly independent of and unrelated to the
Merger and, except to the extent that a third party may either
ascribe enhanced value to FIC as a result of the Merger or be
predominately or exclusively interested in the post-Merger
combined FIC/ILCO operation, there is no connection between
any potential post-Merger transaction involving the stock of
FIC and the Merger. No formal indications of interest have
been received by FIC or by any person who
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owns (or after the Merger will own) more than 4.5% of FIC and
neither FIC nor any such person has determined to sell FIC or
to enter into a transaction that would result in the sale,
exchange or other disposition (whether taxable or tax-free) of
75% or more of the FIC Common Stock outstanding after the
Merger.
9. Immediately following the Merger, FIC will be in control of
ILCO within the meaning of Section 368(c) of the Internal
Revenue Code of 1986, as amended (the "Code").
10. FIC has no plan or intention to cause ILCO to issue additional
shares of stock of ILCO that would result in FIC losing
control of ILCO within the meaning of Section 368(c) of the
Code.
11. Following the Merger, the historic business of ILCO will be
continued by, or a significant portion of ILCO's historic
business assets will be used in a business of ILCO, or a
corporation within FIC's qualified group (within the meaning
of Treasury Regulation Section 1.368-1(d)(4)(ii)).
12. FIC has no present plan or intention: to liquidate ILCO
(including, without limitation, by means of making a
check-the-box election for federal income tax purposes); to
merge ILCO with or into another corporation; to sell,
distribute or otherwise dispose of the ILCO Common Stock
acquired in the Merger except for transfers or successive
transfers of the ILCO Common Stock to one or more corporations
controlled (within the meaning of Section 368(c) of the Code)
in each case by the transferor; or to cause ILCO to sell or
otherwise dispose any of its assets or of any of the assets
acquired from Sub, except for dispositions made in the
ordinary course of business or transfers or successive
transfers of assets to one or more corporations controlled
(within the meaning of Section 368(c) of the Code) in each
case by the transferor.
13. FIC and Sub will pay their respective expenses, if any,
incurred in connection with the Merger, and will not pay any
of the expenses of ILCO or its shareholders incurred in
connection with the Merger.
14. Neither FIC nor Sub is an investment company as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Code.
15. Sub is newly-formed and is a direct subsidiary of FIC. Sub was
formed for the sole purpose of facilitating the Merger. At the
time of the Merger, FIC will be in control of Sub within the
meaning of Section 368(c) of the Code.
16. There is no intercorporate indebtedness existing between FIC
and ILCO or between Sub and ILCO that was issued, acquired or
will be settled at a discount.
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17. Sub will not have any liabilities assumed by ILCO, and will
not transfer to ILCO any assets subject to liabilities, in the
Merger.
18. None of the compensation to be received by any
shareholder-employee of ILCO will be separate consideration
for, or allocable to, any of such person's shares of ILCO
Common Stock; none of the shares of FIC Common Stock to be
received by any shareholder-employee of ILCO in the Merger
will be separate consideration for, or allocable to, any past
or future services, any employment contract, or any noncompete
or consulting agreement.
19. The Merger is being effected for bona fide business reasons,
as described in the Joint Proxy Statement/Prospectus.
20. The Merger Agreement (including all exhibits and attachments
thereto) represents the full and complete agreement among FIC,
Sub, and ILCO regarding the Merger, and there are no other
written or oral agreements regarding the Merger.
21. The information relating to the Merger Agreement and all
related transactions set forth in the Joint Proxy
Statement/Prospectus, insofar as such information relates to
FIC or Sub, or the plans and intentions of either entity, are
true, correct and complete in all material respects.
22. After the Closing Date, FIC and ILCO will comply with the
reporting requirements of Treasury Regulation Section 1.368-3.
23. The undersigned is a duly elected and authorized officer of
FIC, is familiar with the transactions contemplated by, and
the terms and provisions of, the Merger Agreement, has
personal knowledge of the certifications made herein and is
authorized to make these certifications on behalf of FIC. FIC
understands and agrees that the certifications contained
herein will be relied upon by Fulbright & Jaworski, L.L.P. and
Weil, Gotshal & Manges LLP in delivering the tax opinions
described in Section 7.2(c) and 7.3(c) of the Merger
Agreement, will be assumed by them to be accurate without
further inquiry on their part, and, if inaccurate, may
adversely affect their opinions. While the certifications in
this Certificate are made as of the date hereof, they are
intended to have continuing validity through the Effective
Time. If, after executing this Certificate, FIC has reason to
believe that any of the certifications made herein are untrue,
incorrect or incomplete, it will promptly and timely inform
each of said law firms.
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IN WITNESS WHEREOF, FIC, on behalf of FIC and Sub, has
executed this Certificate on this 3rd day of April, 2001.
Financial Industries Corporation
By: /s/ ROY F. MITTE
----------------------------------------------
Name: Roy F. Mitte
Title: President
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