1
EXHIBIT 8
February 3, 2000
United Bancorp
000 X.X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Xxxxxxx National Bank
000 X.X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Bank of Southern Oregon
0000 Xxxx XxXxxxxxx Xxxx
Xxxxxxx, Xxxxxx 00000
PremierWest Bancorp
0000 Xxxx XxXxxxxxx Xxxx
Xxxxxxx, Xxxxxx 00000
Re: AGREEMENT AND PLAN OF MERGER AND SHARE EXCHANGE BY
AND AMONG BANK OF SOUTHERN OREGON, PREMIERWEST
BANCORP, UNITED BANCORP AND XXXXXXX NATIONAL BANK
Ladies and Gentlemen:
We have acted as counsel to United Bancorp and Xxxxxxx
National Bank in connection with the proposed merger of United Bancorp, an
Oregon corporation, with and into PremierWest Bancorp, an Oregon corporation
("Merger"), the proposed subsidiary merger of Xxxxxxx National Bank, a national
association, with and into Bank of Southern Oregon, an Oregon commercial bank
("Subsidiary Merger"), and the proposed share exchange by and between Bank of
Southern Oregon and PremierWest Bank ("Share Exchange"), pursuant to the terms
of the Agreement and Plan of Merger and Share Exchange by and among Bank of
Southern Oregon, PremierWest Bancorp, United Bancorp and Xxxxxxx National Bank
dated as of October 7, 1999 as amended ("Agreement"). The terms of the Merger,
Subsidiary Merger and Share Exchange are described in the Registration Statement
on Form S-4 (the "Registration Statement"), filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act"),
including a Prospectus and Joint Proxy Statement (the "Proxy Statement"). All
capitalized terms used herein that are not defined shall have the meanings set
forth in the Agreement. This opinion is rendered pursuant to your request.
In rendering this opinion, we have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Agreement, (ii) the Proxy Statement, and (iii) such other documents and
management representations as we have deemed necessary or appropriate as a basis
for the opinion set forth below. In rendering our opinion, we have assumed the
genuiness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity with the originals of all documents submitted to us
as copies, and the
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United Bancorp
February 3, 2000
accuracy of all information contained in all documents. In rendering our
opinion, we have considered the applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations, pertinent judicial
authorities, interpretive rulings of the Internal Revenue Service and such other
authorities as we have considered relevant.
SUMMARY OF PROPOSED TRANSACTION
Bank of Southern Oregon is a commercial bank duly organized,
validly existing and in active status under the laws of the State of Oregon. The
authorized capital stock of Bank of Southern Oregon consists of 10,000,000
shares of common stock, without par value. As of December 31, 1999, 4,837,740
shares of Bank of Southern Oregon common stock were issued and outstanding;
there were issued and outstanding options to acquire a total of 343,800 shares
of Bank of Southern Oregon common stock.
PremierWest Bancorp, a wholly owned subsidiary of Bank of
Southern Oregon, is a corporation duly organized, validly existing and in active
status under the laws of the State of Oregon for the purpose of becoming a bank
holding company. The authorized capital stock of PremierWest Bancorp consists of
20,000,000 shares of common stock, without par value. One hundred shares of
PremierWest Bancorp common stock are issued and outstanding, all of which are
held by Bank of Southern Oregon.
United Bancorp is a corporation duly organized, validly
existing and in active status under the laws of the State of Oregon. United
Bancorp is registered as a bank holding company under the Bank Holding Company
Act of 1956 with the Federal Reserve Board. The authorized capital stock of
United Bancorp consists of (i) 5,000,000 shares of common stock, par value $2.50
per share and (ii) 1,000,000 shares of preferred stock, without par value. As of
December 31, 1999, (i) 1,811,334 shares of United Bancorp common stock are
issued and outstanding and (ii) no shares of United Bancorp preferred stock were
issued or outstanding. As of December 31, 1999, there were issued and
outstanding options to acquire a total of 232,000 shares of United Bancorp
common stock.
Xxxxxxx National Bank is a nationally chartered bank duly
organized, validly existing and in active status under the National Bank Act. As
of December 31, 1999, the authorized capital stock of Xxxxxxx National Bank
consisted of (i) 288,401 shares of common stock, par value $2.50 per share, of
which 288,401 shares were issued and outstanding, (ii) 7,500 shares of Series A
preferred stock, par value $100 per share, of which 7,500 shares were issued and
outstanding, and (iii) 8,202 shares of Series B preferred stock, par value $100
per share, of which 8,202 shares were issued and outstanding, all of which are
held by United Bancorp.
The Board of Directors of Bank of Southern Oregon, United
Bancorp, PremierWest Bancorp, and Xxxxxxx National Bank believe that as a result
of the Merger, Subsidiary Merger and Share Exchange, they can create a stronger
and more diversified company. Both Bank of Southern Oregon and Xxxxxxx National
Bank are community- oriented institutions. As a result of the transaction, Bank
of Southern Oregon will increase its profile in the southwest quadrant of
Oregon. The Board of Directors of Bank of Southern Oregon, United Bancorp,
PremierWest Bancorp, and Xxxxxxx National Bank expect that the acquisition will
enhance Bank of Southern Oregon's position as a competitor in the financial
services business, which is rapidly changing and growing more competitive. At
the same time, PremierWest Bancorp expects to maintain a community-banking
orientation. The Board of Directors of Bank of Southern Oregon, United Bancorp,
PremierWest Bancorp, and Xxxxxxx National Bank believe the combined companies
will provide significant benefits to shareholders and customers alike.
Accordingly, the following transactions have been proposed:
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United Bancorp
February 3, 2000
1. At the Effective Time, Bank of Southern Oregon will become a
wholly owned subsidiary of PremierWest Bancorp. At the
Effective Time, all holders of Bank of Southern Oregon common
stock (other than shareholders, if any, who exercise
dissenters' rights) will exchange their shares of Bank of
Southern Oregon common stock in exchange for an identical
number of shares of PremierWest Bancorp. PremierWest Bancorp
was formed on November 26, 1999 as a wholly owned subsidiary
of Bank of Southern Oregon for the purpose of acting as a
holding company of Bank of Southern Oregon.
2. At the Effective Time, United Bancorp will merge with and into
PremierWest Bancorp in accordance with applicable state law.
PremierWest Bancorp will be the surviving corporation in that
merger. Bank of Southern Oregon's shareholders will own
approximately 58 percent of PremierWest Bancorp's shares
immediately after the transactions. United Bancorp's
shareholders will own approximately 42 percent of PremierWest
Bancorp's shares immediately after the transactions. The
separate corporate existence of United Bancorp will cease.
3. At the Effective Time, Xxxxxxx National Bank will merge with
and into Bank of Southern Oregon in accordance with applicable
state law. Bank of Southern Oregon will be the surviving bank
in that Subsidiary Merger. The separate existence of Xxxxxxx
National Bank will cease.
4. At the Effective Time, the outstanding shares of voting common
stock of PremierWest Bancorp owned by Bank of Southern Oregon
immediately prior to the Merger, Subsidiary Merger and Share
Exchange will be surrendered to PremierWest Bancorp.
5. Bank of Southern Oregon will retain its existing charter and
bylaws; it will continue its existing business without change;
it will retain all of its assets, properties, liabilities, and
obligations; and following the Subsidiary Merger, all of the
assets, properties, liabilities, and obligations of Xxxxxxx
National Bank will become assets, properties, liabilities, and
obligations of Bank of Southern Oregon.
6. All accounts maintained with Bank of Southern Oregon and with
Xxxxxxx National Bank prior to the merger will continue as
accounts with Bank of Southern Oregon without change in their
respective terms, interest rates, maturities, minimum required
balances, or withdrawal values.
The following assumptions have been made in connection with
this opinion:
1. The fair market value of PremierWest Bancorp voting common
stock received by each Bank of Southern Oregon shareholder
will be approximately equal, in each instance, to the fair
market value of Bank of Southern Oregon capital stock
surrendered in the exchange.
2. The fair market value of PremierWest Bancorp voting common
stock received by each United Bancorp shareholder will be
approximately equal, in each instance, to the fair market
value of United Bancorp capital stock surrendered in exchange.
3. To the best knowledge of management of Bank of Southern Oregon
and PremierWest Bancorp, there is no plan or intention on the
part of management or of the shareholders of Bank of Southern
Oregon to sell, exchange, or otherwise dispose of shares of
PremierWest Bancorp received in the transaction
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United Bancorp
February 3, 2000
which would result in the aggregate retained ownership of such
shareholders in PremierWest Bancorp having a value, as of the
date of the transaction, of less than 50 percent of the value
of all the formerly outstanding stock of Bank of Southern
Oregon as of the same date. For the purpose of this
assumption, shares of Bank of Southern Oregon capital stock
and shares of PremierWest Bancorp voting common stock held by
Bank of Southern Oregon shareholders and otherwise sold,
redeemed, or disposed of prior to or subsequent to the
transaction will be considered in making this assumption.
4. To the best knowledge of management of United Bancorp and
PremierWest Bancorp, there is no plan or intention on the part
of management or the shareholders of United Bancorp to sell,
exchange, or otherwise dispose of a number of shares of
PremierWest Bancorp received in the transaction which would
result in the aggregate retained ownership of such
shareholders in PremierWest Bancorp having a value, as of the
date of the transaction, of less than 50 percent of the value
of all the formerly outstanding stock of United Bancorp as of
the same date. For purpose of this assumption, shares of
United Bancorp capital stock and shares of PremierWest Bancorp
voting common stock held by United Bancorp shareholders and
otherwise sold, redeemed, or disposed of prior to or
subsequent to the transaction will be considered in making
this assumption.
5. Following the transaction, PremierWest Bancorp will hold at
least 90 percent of the fair market value of United Bancorp's
net assets and at least 70 percent of the fair market value of
United Bancorp's gross assets held immediately prior to the
proposed transaction. For purposes of this assumption, amounts
used by United Bancorp to pay dissenters or to pay
reorganization expenses and all redemptions and distributions
(except for regular, normal dividends) made by United Bancorp
immediately prior to the transactions will be considered as
assets held by United Bancorp immediately prior to the
transaction.
6. Following the transaction, Bank of Southern Oregon will hold
at least 90 percent of the fair market value of Xxxxxxx
National Bank's net assets and at least 70 percent of the fair
market value of Xxxxxxx National Bank's gross assets held
immediately prior to the proposed transaction. For purposes of
this assumption, amounts used by Xxxxxxx National Bank to pay
dissenters or to pay reorganization expenses and all
redemptions and distributions (except for regular, normal
dividends) made by Xxxxxxx National Bank immediately prior to
the transactions will be considered as assets held by Xxxxxxx
National Bank immediately prior to the transaction.
7. Bank of Southern Oregon has no plan or intention to issue
additional shares of its capital stock that would result in
PremierWest Bancorp losing control of Bank of Southern Oregon
within the meaning of Code Section 368(c).
8. PremierWest Bancorp has no plan or intention to reacquire any
of its voting common stock issued in the transaction.
9. No fractional shares of PremierWest Bancorp stock will be
issued in the transaction.
10. PremierWest Bancorp has no plan or intention after the
transaction to liquidate Bank of Southern Oregon, to merge
Bank of Southern Oregon into another corporation; to make any
extraordinary distribution in respect of its stock in Bank of
Southern Oregon; to sell or otherwise dispose of any
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United Bancorp
February 3, 2000
outstanding capital stock of Bank of Southern Oregon or to
cause Bank of Southern Oregon to sell or otherwise dispose of
any of the assets of Bank of Southern Oregon acquired in the
transaction, except for dispositions made in the ordinary
course of business or transfers described in Code Section
368(a)(2)(C).
11. Following the transaction, Bank of Southern Oregon will
continue its historic business and the historic business of
Xxxxxxx National Bank or will use a significant portion of its
historic business assets and the historic business assets of
Xxxxxxx National Bank in continuing its business.
12. PremierWest Bancorp, Bank of Southern Oregon, United Bancorp
and Xxxxxxx National Bank will pay their respective expenses,
if any, incurred in connection with the transaction.
13. The shareholders of Bank of Southern Oregon and shareholders
of United Bancorp will pay their own expenses, if any,
incurred in connection with the transaction.
14. There is no intercorporate indebtedness existing between
PremierWest Bancorp and Bank of Southern Oregon, between
PremierWest Bancorp and United Bancorp, or between Bank of
Southern Oregon and Xxxxxxx National Bank.
15. The assumption by Bank of Southern Oregon of the liabilities
of Xxxxxxx National Bank is for a bona fide business purpose
and the principal purpose of such assumption is not the
avoidance of federal income tax on the transfer of assets of
Xxxxxxx National Bank to Bank of Southern Oregon.
16. The liabilities of Xxxxxxx National Bank to be assumed by Bank
of Southern Oregon in the transaction were incurred by Xxxxxxx
National Bank in the ordinary course of its business.
17. The assumption by PremierWest Bancorp of the liabilities of
United Bancorp is for a bona fide business purpose and the
principal purpose of such assumption is not the avoidance of
federal income tax on the transfer of assets of United Bancorp
to PremierWest Bancorp.
18. The liabilities of United Bancorp to be assumed by PremierWest
Bancorp in the transaction were incurred by United Bancorp in
the ordinary course of its business.
19. At the Effective Time, shares of Bank of Southern Oregon stock
representing control of Bank of Southern Oregon, as defined in
Code Section 368(c), will be exchanged solely for voting
common stock of PremierWest Bancorp.
20. At the Effective Time, shares of United Bancorp stock
representing control of United Bancorp stock, as defined in
Code Section 368(c), will be exchanged solely for voting
common stock of PremierWest Bancorp.
21. At the Effective Time, Bank of Southern Oregon will not have
outstanding any warrants, options, convertible securities or
any other type of right pursuant to which any person could
acquire stock in Bank of Southern Oregon that, if exercised or
converted, would affect PremierWest Bancorp's acquisition or
retention of control of Bank of Southern Oregon, as defined in
Code Section 368(c).
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United Bancorp
February 3, 2000
22. At the Effective Time, United Bancorp will not have
outstanding any warrants, options, convertible securities or
any other type of right pursuant to which any person could
acquire stock in United Bancorp that, if exercised or
converted, would affect PremierWest Bancorp's acquisition or
retention of control of United Bancorp, as defined in Code
Section 368(c).
23. At the Effective Time, Xxxxxxx National Bank will not have
outstanding any warrants, options, convertible securities or
any other type of right pursuant to which any person could
acquire stock in Xxxxxxx National Bank that, if exercised or
converted, would affect Bank of Southern Oregon's acquisition
or retention of control of Xxxxxxx National Bank, as defined
in Code Section 368(c).
24. PremierWest Bancorp does not own, nor has it owned during the
past five years, any shares of the stock of Bank of Southern
Oregon or stock of United Bancorp.
25. Bank of Southern Oregon does not own, nor has it owned during
the past five years, any shares of the stock of Xxxxxxx
National Bank.
26. None of the parties to the transaction are investment
companies as defined in Code Section 368(a)(2)(F)(iii) and
(iv).
27. None of the parties in the transaction are under the
jurisdiction of a court pursuant to Title 11 of the United
States Code or similar case within the meaning of Code Section
368(a)(3)(A).
28. On the date of the transaction, the fair market value of the
assets of Bank of Southern Oregon, United Bancorp, and Xxxxxxx
National Bank will exceed the sum of their liabilities, plus
the amount of the liabilities, if any, to which the assets are
subject.
29. None of the compensation received by any shareholder-employee
of Bank of Southern Oregon or United Bancorp will be separate
consideration for, or allocable to, any of their shares of
Bank of Southern Oregon or United Bancorp stock; none of the
shares of PremierWest Bancorp stock received by any
shareholder-employees of Bank of Southern Oregon or United
Bancorp 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.
30. Neither Bank of Southern Oregon nor Xxxxxxx National Bank has
ever been a mutual savings and loan association or a mutual
savings bank.
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United Bancorp
February 3, 2000
OPINION
Based solely on the information contained herein, and subject
to the qualifications, exceptions, and the assumptions set forth above or
hereafter, we are of the following opinion:
1. The proposed Merger, Subsidiary Merger and Share Exchange will
constitute a tax-free reorganization under Section 368(a) of
the Code. PremierWest Bancorp, Bank of Southern Oregon, United
Bancorp and Xxxxxxx National Bank will each be a party to the
reorganization within the meaning of Section 368(b) of the
Code.
2. No gain or loss will be recognized by Bank of Southern Oregon
shareholders on the exchange of Bank of Southern Oregon stock
solely for PremierWest Bancorp stock pursuant to the Share
Exchange. Code Section 354(a)(1).
3. The tax basis of PremierWest Bancorp stock to be received by
each Bank of Southern Oregon shareholder pursuant to the Share
Exchange will be the same as the tax basis of Bank of Southern
Oregon stock exchanged therefor. Code Section 358(a)(1).
4. The holding period of PremierWest Bancorp stock to be received
by each Bank of Southern Oregon shareholder pursuant to the
Share Exchange will include the period during which the Bank
of Southern Oregon stock surrendered in exchange therefor was
held, provided that the Bank of Southern Oregon stock was held
by the shareholder as a capital asset on the date of exchange.
Code Section 1223(1).
5. No gain or loss will be recognized by PremierWest Bancorp upon
receipt of shares of Bank of Southern Oregon stock pursuant to
the Share Exchange. Code Section 354(a)(1).
6. No gain or loss will be recognized by Bank of Southern Oregon
upon the cancellation of shares of Xxxxxxx National Bank
stock. Code Section 354(a)(1).
7. No gain or loss will be recognized by United Bancorp
shareholders on the exchange of United Bancorp stock solely
for PremierWest Bancorp stock. Code Section 354(a)(1).
Notwithstanding the foregoing, United Bancorp shareholders who
receive cash in lieu of fractional share interests in
PremierWest Bancorp stock may recognize some gain or loss.
8. The tax basis of PremierWest Bancorp stock to be received by
each United Bancorp shareholder will be the same as the tax
basis of United Bancorp stock exchanged therefor; except the
tax basis would be adjusted to reflect cash payments for
fractional interests in PremierWest Bancorp stock. Code
Section 358(a)(1).
9. The holding period of PremierWest Bancorp stock to be received
by each United Bancorp shareholder will include the period
during which the United Bancorp stock surrendered in exchange
therefor was held, provided that the United Bancorp stock was
held by the shareholder as a capital asset on the date of
exchange. Code Section 1223(1).
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United Bancorp
February 3, 2000
10. No gain or loss will be recognized by United Bancorp in
connection with the exchange of United Bancorp stock solely
for PremierWest Bancorp stock.
11. No gain or loss will be recognized by Xxxxxxx National Bank on
the cancellation of Xxxxxxx National Bank pursuant to the
Subsidiary Merger.
12. Cash received by Bank of Southern Oregon shareholders and
United Bancorp shareholders, if any, who exercise dissenters'
rights will be treated as a distribution in full payment for
shares surrendered, which may result in taxable capital gain
or loss or ordinary income to such dissenting shareholders.
Our opinion is limited to the federal income tax matters
described above and does not address any other tax considerations or any state,
local, or foreign tax matters. Our opinion set forth herein is based upon the
description of the contemplated transaction as set forth above in the section
captioned "Summary of Proposed Transaction." If the actual facts relating to any
aspect of the transaction differ from this description in any material respect,
our opinion could be affected thereby. Moreover, our opinion is based on the
Code, applicable Treasury regulations promulgated thereunder, and Internal
Revenue Service rulings, procedures, and other pronouncements, published by the
United States Internal Revenue Service. These authorities are all subject to
change, and such change may be made with retroactive effect. We can give no
assurance that, after such change, our opinion would not be different. This
opinion is not binding on the Internal Revenue Service, and there can be no
assurance, and none is hereby given, that the Internal Revenue Service will not
take a position contrary to one or more of the positions reflected in the
foregoing opinion, or that our opinion will be upheld by the courts if
challenged by the Internal Revenue Service.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement, the reference to this
opinion under the heading "Federal Income Tax Consequences" in the Registration
Statement and the reference to our firm under the heading "Legal Matters" in the
related Proxy Statement which forms a part of the Registration Statement. In
giving such consent we do not thereby admit or imply that we are in the category
of persons whose consent is required under Section 7 of the Act or the rules and
regulations of the Securities and Exchange Commission thereunder. This opinion
is being furnished only to you in connection with the Merger, Subsidiary Merger,
and Share Exchange and solely for your benefit in connection therewith and may
not be used or relied upon for any other purpose and may not be circulated,
quoted or otherwise referred to for any other purpose without our express
written consent.
Very truly yours,
FARLEIGH, WADA & XXXX, P.C.
By: /s/ F. Xxxxx Xxxxxxxx
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F. Xxxxx Xxxxxxxx
