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Cisco - Form Of Opinion Of Brobeck, Phleger & Harrison Llp
EXHIBIT 8.1
[FORM OF OPINION OF BROBECK, PHLEGER & HARRISON LLP]
March __, 1996
Cisco Systems, Inc. 170 West Tasman Drive San Jose, CA 95134
Ladies and Gentlemen:
This opinion is being delivered to you pursuant to Section 6.1(e) of the Agreement and Plan of Reorganization (the "Agreement") among Cisco Systems, Inc., a California corporation ("Cisco"), its wholly-owned subsidiary, Big Sky Acquisition, California corporation ("Sub"), and TGV Software, Inc., a California corporation ("TGV"), dated January 23, 1996. Pursuant to the Agreement and the related Agreement of Merger (collectively, the "Merger Agreements"), Sub will merge with and into TGV (the "Merger"), and TGV will become a wholly-owned subsidiary of Cisco.
Except as otherwise provided, capitalized terms referred to herein have the meanings set forth in the Merger Agreements. All section references, unless otherwise indicated, are to the Internal Revenue Code of 1986, as amended (the "Code").
We have acted as legal counsel to Cisco and Sub in connection with the Merger. As such, and for the purpose of rendering this opinion, we have examined (or will examine on or prior to the Effective Date) and are relying (or will rely) upon (without any independent investigation or review thereof) the truth and accuracy, at all relevant times, of the statements, covenants, representations and warranties contained in the following documents (including all schedules and exhibits thereto):
1. The Merger Agreements;
2. Representations made to us by Cisco and Sub in a letter reproduced as Exhibit A hereto;
3. Representations made to us by TGV in a letter reproduced as Exhibit B hereto;
4. Representations made by certain shareholders of TGV in "Shareholder Representation Agreements";
5. The Registration Statement;
6. An opinion of Morrison & Foerster substantially identical in form and substance to this opinion (the "Morrison's Tax Opinion"); and
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7. Such other instruments and documents related to the formation, organization and operation of Cisco, TGV and Sub or to the consummation of the Merger and the transactions contemplated thereby as we have deemed necessary or appropriate.
In connection with rendering this opinion, we have assumed or obtained representations (and are relying thereon, without any independent investigation or review thereof) that:
4. Original documents (including signatures) are authentic, documents submitted to us as copies conform to the original documents, and there has been (or will be by the Effective Time) due execution and delivery of all documents where due execution and delivery are prerequisites to effectiveness thereof;
5. The Merger will be consummated in accordance with the Merger Agreement and will be effective under the laws of the State of Delaware;
6. The shareholders of TGV do not, and will not on or before the Effective Date, have an existing plan or intent to dispose of an amount of Cisco Common Stock to be received in the Merger (or to dispose of TGV capital stock in anticipation of the Merger) such that the shareholders of TGV will not receive and retain a meaningful continuing equity ownership in Cisco that is sufficient to satisfy the continuity of interest requirement as specified in Treas. Reg. (S)1.368-1(b) and as interpreted in certain Internal Revenue Service rulings and federal judicial decisions;
7. After the Merger, TGV will hold "substantially all" of its and Sub's properties within the meaning of Section 368(a)(2)(E)(i) of the Code and the regulations promulgated thereunder;
8. To the extent any expenses relating to the Merger (or the "plan of reorganization" within the meaning of Treas. Reg. (S)1.368-1(c) with respect to the Merger) are funded directly or indirectly by a party other than the incurring party, such expenses will be within the guidelines established in Revenue Ruling 73-54, 1973-1 C.B. 187;
9. No TGV shareholder guaranteed any TGV indebtedness outstanding during the period immediately prior to the Merger, and at all relevant times, including as of the Effective Time, (i) no outstanding indebtedness of TGV, Cisco or Sub has or will represent equity for tax purposes; and (ii) no outstanding equity of TGV, Cisco or Sub has or will represent indebtedness for tax purposes; and
10. The Morrison Tax Opinion has been delivered and not withdrawn.
Based on our examination of the foregoing items and subject to the assumptions, exceptions, limitations and qualifications set forth herein, we are of the opinion that, for federal income tax purposes, the Merger will be a "reorganization" as defined in Section 368(a) of the Code.
In addition to the assumptions set forth above, this opinion is subject to the exceptions, limitations and qualifications set forth below.
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11. This opinion represents and is based upon our best judgment regarding the application of federal income tax laws arising under the Code, existing judicial decisions, administrative regulations and published rulings and procedures. Our opinion is not binding upon the Internal Revenue Service or the courts, and there is no assurance that the Internal Revenue Service will not successfully assert a contrary position. Furthermore, no assurance can be given that future legislative, judicial or administrative changes, on either a prospective or retroactive basis, would not adversely affect the accuracy of the conclusions stated herein. Nevertheless, we undertake no responsibility to advise you of any new developments in the application or interpretation of the federal income tax laws.
12. This opinion addresses only the classification of the Merger as a reorganization under Section 368(a) of the Code, and does not address any other federal, state, local or foreign tax consequences that may result from the Merger or any other transaction (including any transaction undertaken in connection with the Merger). In particular, we express no opinion regarding (i) whether and the extent to which any TGV shareholder who has provided or will provide services to TGV, Cisco or Sub will have compensation income under any provision of the Code; (ii) the effects of such compensation income, including but not limited to the effect upon the basis and holding period of the Cisco stock received by any such shareholder in the Merger; (iii) the potential application of the "golden parachute" provisions (Sections 280G, 3121(v)(2) and 4999) of the Code, the alternative minimum tax provisions (Sections 55, 56 and 57) of the Code or Sections 305, 306, 357, 424, and 708, or the regulations promulgated thereunder; (iv) other than the fact that the merger will be a reorganization within the meaning of Code Section 368 and the consequences that follow directly and solely from such characterization, the corporate level tax consequences of the Merger to Cisco, Sub or TGV, including without limitation the recognition of any gain and the survival and/or availability, after the Merger, of any of the federal income tax attributes or elections of TGV, after application of any provision of the Code, as well as the regulations promulgated thereunder and judicial interpretations thereof; (v) the basis of any equity interest in TGV acquired by Cisco in the Merger; (vi) the tax consequences of any transaction in which TGV stock or a right to acquire TGV stock was received; and (vii) the tax consequences of the Merger (including the opinion set forth above) as applied to stockholders of TGV and/or holders of options or warrants for TGV stock or that may be relevant to particular classes of TGV stockholders and/or holders of options or warrants for TGV stock such as dealers in securities, corporate shareholders subject to the alternative minimum tax, foreign persons, and holders of shares acquired upon exercise of stock options or in other compensatory transactions.
13. No opinion is expressed as to any transaction other than the Merger as described in the Merger Agreements or to any transaction whatsoever, including the Merger, if all the transactions described in the Merger Agreements are not consummated in accordance with the terms of such Merger Agreements and without waiver or breach of any material provision thereof or if all of the representations, warranties, statements and assumptions upon which we relied are not true and accurate at all relevant times. In the event any one of the statements, representations, warranties or assumptions upon which we have relied to issue this opinion is incorrect, our opinion might be adversely affected and may not be relied upon.
14. This opinion has been delivered to you for the purpose of satisfying the conditions set forth in Section 6.1(e) of the Agreement and is intended solely for your benefit; it may not be relied upon for any other purpose or by any other person or entity, and may not be
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made available to any other person or entity without our prior written consent. We do hereby consent to the filing of this opinion as an exhibit to the Registration Statement and further consent to all references to us in the Registration Statement, the proxy statement/prospectus constituting a part thereof and any further amendments thereto. In giving this consent, we do not admit that we are in 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 Commission thereunder.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
Exhibit A
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March __, 1996
Brobeck, Phleger & Harrison Morrison & Foerster Two Embarcadero Place Embarcadero Center West 2200 Geng Road 275 Battery Street Palo Alto, California 94306 San Francisco, California 94306
Re: Merger pursuant to the Agreement and Plan of Reorganization (the
"Agreement"), dated January 23, 1996, among Big Sky Acquisition
Corporation, a Delaware corporation ("Sub"), Cisco Systems, Inc.,
a California corporation ("Cisco"), and TGV Software, Inc., a
Delaware corporation ("TGV").
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Gentlemen:
This letter is supplied to you in connection with your rendering of opinions pursuant to Section 6.1(e) of the Agreement regarding certain federal income tax consequences of the Merger (as defined in Section 1.1 of the Agreement). Unless otherwise indicated, capitalized terms not defined herein have the meanings set forth in the Agreement.
B. Representations. After consulting with their counsel and auditors
--------------- regarding the meaning of and factual support for the following representations, the undersigned hereby certify and represent that the following facts are now true and will continue to be true as of the Effective Date of the Merger (as defined in Section 1.1 of the Agreement):
1. Pursuant to the Merger, Sub will merge with and into TGV, and TGV will acquire all of the assets and liabilities of Sub. At least ninety percent (90%) of the fair market value of the net assets and at least seventy percent (70%) of the fair market value of the gross assets held by TGV immediately prior to the Merger will continue to be held by TGV immediately after the Merger. For the purpose of determining the percentage of TGV's net and gross assets held by it immediately following the Merger, the following assets will be treated as property held by TGV immediately prior but not subsequent to the Merger: (i) assets disposed of by TGV prior to or subsequent to the Merger and in contemplation thereof (including without limitation any asset disposed of by TGV, other than in the ordinary course of business, pursuant to a plan or intent existing during the period ending on the Effective Date and beginning with the commencement of negotiations (whether formal or informal) with Cisco regarding the Merger (the "Pre-Merger Period")), (ii) assets used by TGV to pay shareholders perfecting dissenters' rights or to pay other expenses or liabilities incurred in connection with the Merger, and (iii) assets used to make distribution, redemption or other payments in respect of TGV capital stock or rights to acquire such stock (including payments treated as such for tax purposes) that are made in contemplation of the Merger or related thereto;
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2. Cisco is participating in the Merger for good and valid business reasons and not for tax purposes;
3. Prior to the Merger, Cisco will be in "Control" of Sub. As used herein, "Control" of a corporation shall consist of ownership of stock possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote and at least eighty percent (80%) of the total number of shares of all other classes of stock of the corporation. For purposes of determining Control, a person shall not be considered to own voting stock if rights to vote such stock (or to restrict or otherwise control the voting of such stock) are held by a third party (including a voting trust) other than an agent of such person;
4. In the Merger, all shares of TGV capital stock (other than shares with respect to which dissenters' rights are exercised) will be exchanged solely for voting stock of Cisco, except to the extent of cash paid in lieu of fractional shares in accordance with the terms of the Merger Agreement;
5. Cisco has no plan or intention to cause TGV to issue additional shares of stock after the Merger that would result in Cisco losing Control of TGV;
6. Other than with respect to the possible repurchase in the ordinary course of business of shares held by TGV employees pursuant to Cisco's assumption of TGV's obligations under the TGV Stock Option Plan, Cisco has no plan or intention to reacquire any of its stock issued pursuant to the Merger;
7. Except for transfers described in both Section 368(a)(2)(C) of the Code and Treasury Regulation Section 1.3682(j)(4), Cisco has no current plan or intention to (i) liquidate TGV; (ii) merge TGV with or into another corporation including Cisco or its affiliates; (iii) sell, distribute or otherwise dispose of the capital stock of TGV; or (iv) cause TGV to sell or otherwise dispose of any of its assets (or any assets acquired from Sub) except for dispositions made in the ordinary course of business or payment of expenses incurred by TGV pursuant to the Merger (including payments made with respect to dissenting and fractional shares, if any); provided, however, that nothing herein shall be understood to impose any limitation on the right of Cisco to transfer assets or engage in any other transaction which Cisco may determine to be necessary, appropriate or desirable in the exercise of its business judgement after the Merger in response to the circumstances then existing;
8. In the Merger, Sub will have no liabilities assumed by TGV and will not transfer to TGV any assets subject to liabilities, except to the extent incurred in connection with the transactions contemplated by the Agreement;
9. Cisco intends that, following the Merger, either the historic business of TGV will be continued or a significant portion of TGV's historic business assets will be utilized in a business;
10. Neither Cisco nor any current or former subsidiary of Cisco owns, or has owned during the past five (5) years, directly or indirectly, any shares of TGV capital stock, or the right to acquire or vote any such shares;
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11. Cisco is not an investment company within the meaning of Section 368(a)(2)(F)(iii) and (iv) of the Code;
12. No shareholder of TGV is acting as agent for Cisco in connection with the Merger or approval thereof, and Cisco will not reimburse any TGV shareholder for TGV capital stock such shareholder may have purchased or for other obligations such shareholder may have incurred;
13. Neither Cisco nor Sub is 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. Cisco has no knowledge of any plan or intention on the part of TGV's shareholders (a "Plan") to engage in a sale, exchange, transfer, distribution, pledge, disposition or any other transaction which results in a reduction in the risk of ownership or a direct or indirect disposition (a "Sale") of (a) shares of Cisco Common Stock to be issued to such shareholders in the Merger, which shares would have an aggregate fair market value, as of the Effective Date of the Merger, in excess of fifty percent (50%) of the aggregate fair market value, immediately prior to the Merger, of all outstanding shares of TGV capital stock or (b) more than fifty percent (50%) of the shares of Cisco Common Stock to be received in exchange for TGV capital stock in the Merger. For purposes of this paragraph, shares of TGV capital stock (or the portion thereof) (i) with respect to which a TGV shareholder receives consideration in the Merger other than Cisco Common Stock (including, without limitation, cash received pursuant to the exercise of dissenters' rights or in lieu of fractional shares of Cisco Common Stock) and/or (ii) with respect to which a Sale occurs prior to and in contemplation of the Merger (other than the conversion of TGV Preferred Stock into TGV Common Stock) shall be considered shares of outstanding TGV capital stock exchanged for Cisco Common Stock in the Merger and then disposed of pursuant to a Plan;
15. The payment of cash in lieu of fractional shares of Cisco is solely for the purpose of avoiding the expense and inconvenience to Cisco of issuing fractional shares and does not represent separately bargained-for consideration. The total cash consideration that will be paid in the Merger to TGV shareholders in lieu of fractional shares of Cisco Common Stock will not exceed one percent (1%) of the total consideration that will be issued in the Merger to TGV shareholders in exchange for their shares of TGV capital stock. The fractional share interests of each TGV shareholder will be aggregated and no TGV shareholder will receive cash in an amount greater than the value of one full share of Cisco Common Stock;
16. Except with respect to (i) payments of cash to TGV shareholders in lieu of fractional shares of Cisco Common Stock and (ii) payments of cash to TGV shareholders perfecting dissenters' rights, one hundred percent (100%) of the TGV capital stock outstanding immediately prior to the Merger will be exchanged solely for Cisco Common Stock. Thus, except as set forth in the preceding sentence, Sub and Cisco intend that no consideration be paid or received (directly or indirectly, actually or constructively) for TGV capital stock other than Cisco Common Stock;
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17. The total fair market value of all consideration other than Cisco Common Stock received by TGV shareholders in the Merger (including, without limitation, cash paid to TGV shareholders perfecting dissenters' rights or in lieu of fractional shares of Cisco Common Stock) will be les...
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